Lender loses license due to abusive practices

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The Securities and Exchange Commission (SEC) has deprived Familyhan Credit Corp. the power to operate as a loan company, citing unfair debt collection practices and failure to disclose true loan rates.

The SEC Revoked Familyhan’s Certificate of Authority After Discovering Three Counts of Violating the SEC Memorandum Circular No. 18, Series of 2019 (SEC MC 18), which prohibits unfair debt collection practices, as well as eight counts violation of the Truth in Loan Law (Tila) or Republic Law No. 3765.

Familyhan violated the prohibition on unfair debt collection practices when it contacted people on the debtor’s contact list other than those named as guarantors or co-sponsors of the loan agreement, according to the Department of Governance of SEC Business and Finance (CGFD).

“Notwithstanding the borrower’s consent, contacting people on the borrower’s contact list other than those who have been designated as guarantors or co-creators also constitutes an unfair debt collection practice,” explained the CGFD. , citing section 1 (h) of SEC MC 18.

Whether or not contacting third parties on the borrower’s contact list was Familyhan’s standard operating procedure prior to the issuance of SEC MC 18, the company has had sufficient time to change these collection practices in the future. when this was prohibited by the circular memorandum, the CGFD is noted.

Complaints

SEC MC 18, which came into effect in 2019, was issued as part of the SEC’s response to growing complaints about unreasonable, abusive and unfair practices by certain loan and finance companies.

Familyhan also violated Tila’s guidelines by failing to disclose the fine print of the loan, the regulator said.

“[I]It is clear that the net proceeds of the loan is one of the minimum information that must be disclosed by a creditor to his borrower, ”said CGFD. “Thus, in the absence of such information, the Respondent cannot claim that he duly complied or substantially complied with Tila.”

The SEC issued a circular memorandum in 2011 to implement the Tila provided for by Bangko Sentral ng Pilipinas (BSP) Circular No. 730, 2011 series, in order to improve transparency of loan transactions and prevent lending uninformed use of credit.

The BSP requires lenders to disclose to all types of borrowers the terms of the loan, including the total amount to be financed, finance charges, the net proceeds of the loan, and the percentage that finance charges represent of the total amount payable. finance, before the transaction is concluded.

Familyhan had filed a petition for reconsideration of the GCFD’s order to revoke its certificate of authority, but it was dismissed for lack of merit by the CGFD in a resolution dated June 18.

Monitoring

The SEC is committed to continuing to monitor loan and finance companies to ensure they comply with applicable laws, rules and regulations.

So far, the SEC has canceled the licenses of 35 finance and loan companies due to various violations of applicable rules and regulations. The SEC also revoked the registration certificates of a total of 2,081 loan companies for their failure to obtain the required certificate of authority under the Loan Company Regulation Act 2007.

In addition, 58 online loan companies have been ordered to cease their activities because they are not authorized to operate as a loan or finance company.

—Doris Dumlao-AbadilLa inq

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