SEC pushes overhaul of online lending rules

The Securities and Exchange Commission (SEC) has received broad support for its plan to lift the moratorium on online lending platforms while tightening capital requirements, as regulators move to weed out abusive players in the fast-growing sector.

SEC Chair Francis Lim said initial feedback from stakeholders showed general acceptance of stricter capitalization rules, which are seen as a key safeguard against predatory practices.

“I think generally they’re in favor of higher capital so that only the good ones will remain,” Lim said, noting that the current minimum capital of P1 million has allowed smaller, undercapitalized lenders to operate aggressively.

The regulator has been reviewing a large volume of public comments following the proposal to reopen the online lending space. Issues raised include lending fees and operational standards, but the proposed increase in capital requirements has drawn little resistance.

Lim said the move aims to filter out erring firms that resort to questionable practices, including insufficient due diligence and harassment of borrowers.

“Our experience is that because the capital requirement is small, they’re so aggressive in lending,” he said. “They’re not doing due diligence and when borrowers default, they resort to shaming.”

The SEC earlier released for public comment a moratorium on new online lending platforms amid rising complaints of abusive collection methods.

Lifting this ban—paired with stricter rules—is seen as a calibrated approach to allow legitimate players back into the market while protecting consumers.

While no firm timeline has been set for the release of the final memorandum circular (MC), Lim stressed that the agency is taking time to carefully study all feedback.

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“I don’t want to set a target date after comments. I want the department to really study them,” he said, adding that there is urgency to act given persistent complaints.

The SEC chief also underscored the importance of public consultations in shaping policy, saying regulators benefit from industry insights.

“We’re not all-knowing. That’s why we’re encouraging people to comment on whatever draft MC that we have,” he said.

The push forms part of a broader reform agenda at the SEC, which has ramped up rulemaking in recent months.