SEC Orders 12 More Online Lending Companies to Stop Operations

The Securities and Exchange Commission (SEC) has enjoined another batch of online lending operators from further engaging in lending activities for their failure to secure the necessary licenses.

The Commission en banc on Oct. 10 issued a cease and desist order against A&V Lending Mobile, A&V Lending Investor, A.V. Lending Corporation, Cashaku, Cashaso, CashEnergy, Happy Loan, Peso Pagasa, Vito Lending Corp., Phily Kredit, Rainbow-Cash and Rainbowcash.Ph Lending Corp.

“Considering that the online lending operators are not incorporated entities or have no Certificate of Authority to Operate as Lending Companies or Financing Companies, the lending activities and transaction are illegal and have to be stopped immediately by this Commission,” the cease and desist order read.

“Moreover, the abusive collection practices engaged in by unlicensed online lending companies constitute unfair debt collection practices which the Commission expressly prohibits under SEC Memorandum Circular No. 18, Series of 2019 (Prohibition on Unfair Debt Collection Practices of Financing Companies and Lending Companies) which took effect recently,” it said.

The SEC urged the owners and operators of the online lending applications, their agents, representatives and promoters, the owners of their hosting sites and all persons acting for and on their behalf to immediately cease and desist, under pain of contempt, from engaging in, promoting and facilitating unauthorized lending activities.

The Commission also ordered the online lending operators to cease from offering and advertising their lending business through the internet and to delete or remove promotional presentations and offerings of such lending business from the internet, including the lending applications that they operate.

Furthermore, the SEC directed any and all persons and entities carrying out, abetting or promoting lending business or similar activities without the requisite license to immediately cease and desist from engaging in such lending activities until they have incorporated and have secured the requisite certificate of authority to operate as lending or financing companies.

Section 4 of Republic Act 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation.
It further provides that “no lending company shall conduct business unless granted an authority to operate by the SEC.”

Any person who shall engage in the business of lending without a validly subsisting authority to operate from the SEC may face a fine ranging from PHP10,000 to PHP50,000, or imprisonment of six months to 10 years or both, under Section 12 of the Lending Company Regulation Act.

Based on the findings of the SEC Corporate Governance and Finance Department (CGFD), the online lending applications and their operators are not registered as a corporation or partnership and/or have not been issued certificates of authority to operate as lending or financing companies.

Source: PNA