The SEC wants online lending companies to jump through hoops
The Securities and Exchange Commission (SEC) seeks to purge the online lending industry of abusive and predatory practices through careful screening of companies applying for a license.
After imposing a moratorium on the licensing of new online lending platforms (OLPs), the regulator is proposing a framework that will apply to existing and newly registered finance and lending companies that are yet to own, operate or use PLOs and other modes of financing. technology (fintech). It will also cover fintech companies that plan to offer credit and related services.
The SEC released the draft guidelines for public comment on Friday, giving interested parties until Dec. 3 to submit their submissions.
Under the proposed guidelines, no finance or lending company will be permitted to own, operate or use PLOs, or engage in fintech without prior SEC registration and approval. The corporate regulator may, at its discretion, set a limit on the total number of PLOs that may be established.
The company’s ability to engage in fintech must also be included in its purpose as set out in its articles of association.
The names of PLOs must be registered as the business or trade names of the finance or lending company in accordance with the Amended Guidelines and Procedures on the Use of Business and Partnership Names.
In addition to being duly registered and licensed as finance or loan companies, applicants for an OLP license must also have at least five directors and at least two independent directors, or such number as will constitute 20% of the members. of the board of directors, as the case may be. is higher.
The applicant will be required to submit documentation, including a detailed business and operational plan containing the company’s compliance with various laws protecting consumers from unfair and inaccurate billings and other charges. According to the draft guidelines, an OLP license will have an initial validity of one year from the date of issue and will be subject to periodic review and renewal.
Finance companies that do not comply with the conditions of the license will be fined P100,000 for the first offense and P200,000 for the second offence. Similarly, loan companies will be subject to penalties of 50,000 and 100,000 pula for the first and second offences, respectively.
For the third offense, the SEC can impose a fine of at least twice the base sentence but not more than 1 million pesos. License suspension and revocation can be implemented as appropriate. INQ
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