SEC writes guidelines for online lending platforms – Manila bulletin
The Securities and Exchange Commission (SEC) has released draft guidelines for the registration and operation of online lending platforms (OLP) as part of its efforts to end abusive and predatory practices.
The Commission released the draft guidelines for public comment on November 19, following the imposition of a moratorium on the registration of new PLOs on November 5.
The proposed guidelines will apply to existing and newly registered finance and lending companies that have not yet owned, operated or used PLOs and other modes of financial technology (fintech), as well as those that are already engaged in fintech, looking to provide their credit products and related services.
Under the proposed guidelines, no finance or loan company will be permitted to own, operate or use PLOs or engage in financial technology without registration and prior approval by the SEC.
The company’s ability to engage in fintech must also be included in its objective as stated in its statutes.
In addition, PLO names should be registered as trade or trade names of the finance or loan company, in accordance with SEC Circular No. 13, Series of 2019, which provides amended guidelines and procedures on the use of company and company names. .
In addition to being duly registered and licensed as finance or loan companies, applicants for a PLO license must also have at least five directors and at least two independent directors, or a number that will constitute 20 percent of the membership of the organization. board, whichever is the highest.
The applicant must submit certain documents to the Commission, including a detailed business and operational plan containing the company’s compliance with the Truth in Lending Act (TILA) and SEC disclosure requirements on corporate advertisements. finance and loan companies and reporting online loan platforms.
In addition, the applicant finance or loan company must demonstrate that it complies with the prohibition of unfair debt collection practices by finance companies and loan companies; the law on the credit information system; and the obligation for companies, partnerships, associations and individuals to create or designate an e-mail account address and mobile phone number for transactions with the Commission.
The SEC Corporate Governance and Finance Department (CGFD) will then assess the documents submitted by the applicant company.
The finance or loan company will then present its business and operating plan as well as its marketing strategy, target market, interest rates, loan products and services to a panel of SEC officials.
The finance or lending company will also provide an overview of the PLO simulating the user’s actual experience, their complaints handling process, and a discussion of the extent of data to be collected by the PLO and how they will be processed.
The SEC panel will then submit its recommendation to the En Banc Commission, which will decide whether to accept or deny the request.
The decision of the Commission en banc will be considered final. Rejected finance and loan companies can reapply after one year and must demonstrate that the reason for the rejection no longer exists.
According to the draft guidelines, the OLP license will have an initial validity of one year from the date of issue, subject to periodic review and renewal by the SEC.
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