After NPC ordered four online lending apps to be shut down a few months ago, the SEC for their part imposed a moratorium on the registration of new online lending apps. Aside from privacy risks, SEC explained that they stopped accepting applications as some online lending apps engage in abusive practices like shaming borrowers by texting or calling their friends and relatives.

“We have seen the emergence of financial technology companies that engage in predatory lending, taking advantage of those struggling financially during the pandemic. The Commission will work toward stamping out these abusive financing and lending companies that do nothing but bury borrowers in even more debt,” SEC chairperson Emilio Aquino said.

Together with the announcement of the moratorium, Aquino said that they are crafting new guidelines to make lending and financial companies better address the needs of their customers and plug the loopholes that give rise to predatory practices. “The Commission will work toward stamping out these abusive financing and lending companies that do nothing but bury borrowers in even more debt.”

SEC also clarifies that online lending apps that have been recorded prior to the moratorium may continue to operate, but will be subject to strict monitoring and audit. To date, the SEC has cancelled the license for 35 lending companies, while 2081 firms had their licenses revoked due to incomplete documents.

To recap, Privacy Commissioner Raymund Liboro urged all online lending apps to use reasonable methods when processing loans to their applicants especially when it comes to respecting the borrower’s privacy.