SEC fines Nittan Capital for hidden loan charges
The Securities and Exchange Commission (SEC) has imposed a penalty on Nittan Capital Finance Inc. (NCFI) for failing to fully disclose interest rates, charges and other loan details before the signing of a loan agreement.
In a statement on Monday, the SEC said its Financing and Lending Companies Department (FLCD) determined that NCFI had violated the Truth in Lending Act (Republic Act No. 3765) in relation to SEC Memorandum Circular No. 7, Series of 2011, which governs disclosure requirements for lenders.
The regulator explained that the law requires creditors to clearly disclose the true cost of credit, including interest rates and other related charges, before a borrower signs a loan contract.
MC No. 7 provides the implementing rules of the law and sets out a graduated penalty framework for violations.
In an order dated Feb. 13, the FLCD directed NCFI to pay an administrative fine of P88,500. The amount consists of P20,000 for the first offense and P68,500 representing penalties for 685 days of continued violation.
Aside from the monetary penalty, the regulator also ordered the company to review and revise its disclosure statement templates, amortization schedules and loan information sheet to ensure full compliance with the Truth in Lending Act and the relevant SEC circular.
Acting on the complaint, the FLCD found multiple material deficiencies in NCFI’s disclosures to the borrower, particularly the incomplete presentation of upfront charges and amortization details.
The regulator also said the company had failed to inform the borrower about certain conditional charges before the loan was finalized, including taxes that would be passed on to the borrower as well as the effective interest rate of the loan.
In its order, the SEC emphasized that lenders must provide disclosures with sufficient clarity and lead time so borrowers can properly evaluate the cost of credit before agreeing to a loan transaction.
