By Alexandria Grace C. Magno, Reporter
THE Securities and Exchange Commission’s (SEC) move to lift its 2021 moratorium on latest online lending platforms (OLPs), alongside proposed stricter capital and compliance requirements, is drawing cautious support from industry players, amid concerns over enforcement and regulatory consistency.
Global Dominion President and Chief Executive Officer Patricia Poco-Palacios said the moratorium addressed earlier concerns about lending practices, and lifting it with stricter requirements could help strengthen industry regulation and consumer protection.
“I feel the intent behind lifting the moratorium, paired with strong regulatory safeguards, reflects an advancing approach to financial regulation within the Philippines — and that could be a welcome development,” she told BusinessWorld in an e-mail.
“What really matters is that the necessities are applied consistently and that latest entrants are held to the identical standards from day one,” she added.
The SEC imposed the moratorium in November 2021 on the registration of recent online lending platforms run by financing and lending corporations because it worked on rules to curb predatory lending and abusive debt collection practices.
This 12 months, the SEC is moving to lift the moratorium and sought public feedback, which ended on March 25, on a proposed framework requiring as much as P100 million in capital for the biggest operations and a three-year compliance period for existing firms.
Published on March 11, the SEC’s draft circular seeks to lift the moratorium on latest OLPs and introduce a “pay-to-scale” framework geared toward enhancing consumer protection and market stability.
Moritz Gastl, general manager at Tala Philippines, said stronger enforcement against unregistered lenders, copycat applications, and abusive collection practices shall be needed once the moratorium is lifted.
“Social impact-driven fintech corporations, like Tala, and regulators must work hand in hand to balance responsible innovation and consumer protection, so latest players must be strictly screened to make sure their operations will truly improve Filipinos’ quality of life beyond access to credit,” he told BusinessWorld in a separate e-mail.
On the proposed capital threshold, Mr. Gastl said higher capital requirements indicate a maturing industry and should help filter out bad actors, but he added that stricter oversight of collection agencies and broader coordination on borrower protection may also be needed to enhance trust.
He also noted that rising living costs and stagnant incomes are driving demand for reliable credit, adding that transition measures should ensure continued supply.
“Clear and predictable regulations allow us to factor them into our business and deal with providing credit to underserved Filipinos,” he added.
“So long as latest rules don’t impose disproportionate administrative burdens on reputable corporations nor disrupt legitimate business operations, Tala will gladly satisfy capitalization requirements,” Mr. Gastl said.
“We also hope that processing times and licensing fees are in keeping with our Southeast Asian neighbors to make sure regional competitiveness.”
The draft circular links the suitable to operate digital platforms on to an organization’s paid-up capital.
For financing corporations, the necessities are graduated based on the variety of apps they manage: P30 million for one OLP, P60 million for 2 to 5, and P100 million for the utmost allowable limit of 10 platforms.
Lending corporations face an identical but lower-scaled requirement, topping out at P50 million for 10 platforms.
The Commission may also grant existing financing and lending corporations a three-year transition period to comply with revised paid-up capital requirements and require affected entities to submit a compliance plan inside 60 days of the circular’s effectivity.
Ms. Poco-Palacios said stricter requirements could help level the playing field, adding that the three-year transition period for capital increases appears manageable for operators.
“At the top of the day, those of us who’ve invested in compliance, in people, and in responsible lending practices should welcome a better bar since it distinguishes us from those that are exploiting regulatory gaps,” she said.
“Ultimately, more responsible players in the web lending space mean more Filipinos having access to credit. And access to credit, when delivered responsibly, is transformative,” Ms. Poco-Palacios noted.