SEC Revokes Familyhan Credit License Due to ‘Unfair’ Debt Collection Practices

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The Securities and Exchange Commission (SEC) revoked the authorization to operate as a loan company from Familyhan Credit Corp.

In a statement on Tuesday, the SEC said its Corporate Governance and Finance Department (CGFD), in an order dated April 13, held Familyhan responsible for three violations of Circular No.18, 2019 series. (SEC MC 18), which provides for the prohibition of unfair debt collection practices by finance companies and loan companies.

Likewise, the business regulator said its CGFD concluded that Familyhan had committed eight violations of Republic Law No.3765 or the Truth in Lending Law (TILA), in connection with the circular of the SEC No. 7, 2011 series (SEC MC 7), which describes the rules for implementing TILA to improve transparency in loan transactions.

The SEC noted that “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-creators of the loan agreement.”

“Notwithstanding the borrower’s consent, contacting persons 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,” said he declared.

Whether or not contacting third parties on the borrower’s contact list is standard operating procedure for Familyhan prior to the issuance of SEC MC 18, the SEC said its CGFD noted that the company should have change its collection practices at a time when this was prohibited by the circular memorandum. .

SEC MC 18 came into effect on September 8, 2019, as part of the commission’s response to several complaints of unreasonable, abusive and unfair practices used by loan and finance companies to collect debt from borrowers.

“Sufficient time has been given to the Respondent to adjust its collection process to comply with the SEC MC 18,” said the CGFD of the SEC.

“This violation cannot therefore be ignored. “

Meanwhile, Familyhan violated SEC MC 7 by failing to disclose the net proceeds of the loan to its borrowers.

“[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 their borrower, ”said the CGFD of the SEC.

“Thus, in the absence of such information, the Respondent cannot claim that he duly complied or substantially complied with TILA,” he added.

The SEC MC 7 adopted the TILA implementation rules provided for in Circular No.730 of Bangko Sentral ng Pilipinas (BSP), 2011 series to improve transparency of loan transactions and prevent uninformed use of credit .

Likewise, Bangko Sentral ng Pilipinas Circular No.730, Series of 2011 requires lenders to disclose to all types of borrowers the terms of the loan, including the total amount to be financed, the cost of financing, the proceeds net of the loan and the percentage that the financing charges relate to the total amount to be financed, before the operation is carried out.

“Therefore, in view of the above, the Certificate of Authorization to Operate as a Loan Company of Familyhan Credit Corporation is revoked,” the SEC CGFD said.

The SEC noted that Familyhan filed a petition for reconsideration of the said order, but was dismissed for want of merit by the CGFD in a resolution dated June 18, 2021.

So far, the business regulator has revoked the licenses of 35 finance / loan companies due to various violations of applicable rules and regulations.

The SEC also revoked the certificate of registration of a total of 2,081 loan companies for their failure to obtain the required certificate of authority, pursuant to Republic Law No. 9474 or the 2007 Law of regulation of loan companies.

Some 58 online loan applications have been ordered to cease operations for lack of authorization to operate as a loan or finance company.

GMA News Online is trying to contact Familyhan Corp. to comment on the matter through the contact details available on its website.—AOL, GMA News


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