The Securities and Exchange Commission (SEC) said it will undertake measures to crack down on the proliferation of the so-called informal lenders, or those entities engaged in lending, but without the necessary registration.
SEC Chairman Teresita Herbosa said there are about 3,512 companies registered with the SEC, but do not have the necessary secondary license called as certificate of authority.
Herbosa said the agency has already asked the National Bureau of Investigation and the police force to do covert operations to catch those running their lending business illegally.
She said, however, the SEC will give those legitimate lending firms up to one year to comply with the regulation.
“We do not want to drive out of business, those who are legimate,” Herbosa said.
The Lending Company Regulation Act of 2007 slaps a fine of not less than P10,000 and not more than P50,000 or imprisonment of between six months to 10 years.
The SEC said since the law was implemented, it has required those companies to obtain certificates of authority and 900 firms have complied. Since then, it has issued more “show cause” letters to about 3,000 companies, with the warning their registration will be revoked if they fail to obtain the secondary license.
Herbosa said the agency’s move was in connection with President Duterte’s recent State of the Nation Address to crack down on informal lenders.
She said their investigation showed many of these informal lenders are selling their products through online advertisements, distribution of flyers and text messages.