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Lending firm’s license revoked for violations

THE Securities and Exchange Commission (SEC) has cancelled the certificate of authority of a lending company due to its unfair debt collection practices.

On August 25, the SEC Corporate Governance and Finance Department (CGFD) ordered FCash Global Lending Inc. to stop operations for violating SEC Memorandum Circular No. 18, Series of 2019 (SEC MC 18), an order that spells out the Prohibition on Unfair Debt Collection Practices of Financing Companies and Lending Companies.

The order pointed out that the company, which operates online platforms Fast Cash and Fast Cash Loan, “has made multiple attempts to collect loan payments by contacting or threatening persons other than those that the borrower has identified as guarantors or co-makers.”

“FCash has likewise sent messages threatening borrowers with charges for estafa, complaints before the National Bureau of Investigation, and service of writ of garnishment or writ of attachment,” it added.

It also “threatened to report borrowers to their respective employers and used abusive words when talking to them over the phone. The CGFD also noted how FCash took advantage of borrowers’ lack of awareness of legal terminologies to compel them to pay their loans,” it said.

The agency first imposed a fine of P25,000 on FCash after committing its first violation about a year ago, and another fine of P50,000 for committing the same violation the next day. On December 12, 2019, the division eventually charged the company for committing its third violation.

In trying to parry the case against itself, the entity claimed that it could not be charged for violating the provision of the circular based on complained involving loan transactions which were completed before the effectivity of the order.

However, the CGFD said the entity “‘was bound to comply with its provisions at the time it became effective – with respect to new and existing loan accounts, insofar as the latter remain pending and demandable.”

“In any case, even before the effectivity of SEC MC 18, there was neither right nor obligation on the respondent’s part to harass or employ abusive tactics in conducting its collection. It is basic that in the exercise of rights and performance of duties, one must act with justice, give everyone his due and observe honesty and good faith,” it added.

The agency issued the circular, which took effect on September 8, 2019 to address complaints of borrowers “for unreasonable, abusive, and unfair practices that lending and financing companies used in order to collect debt from borrowers.”

The CGFD even noted that FCash “had one of the most number of complaints for collection harassment since 2017.”

“[The SEC] has consistently reminded the public to be cautious and mindful of the terms and conditions of a loan contract before consenting to the same, especially the interest rates, penalties, and other charges,” the CGFD said.

The agency said it “is not blind to the pernicious effects of the abusive collection practices of some lending companies – loss of employment and livelihood, psychological trauma, domestic strife, and even loss of lives.”

It added that it has continued to fully commit itself in running after abusive lending companies even as it urged the public to be cautious in dealing similar entities especially those that use online platforms.

This year, the SEC also ordered CashAB, CashOcean, KwikPeso and Little Cash, to stop operations for lack of authority to operate as lending or financing company even as they were found to have used abusive collection practices.

“While the Commission fully supports the growth of lending and financing companies and recognizes the significant role they play in terms of financial inclusion and access to credit, it shall remain relentless and steadfast in its mandate to crack down abusive lending companies that prey on the desperate and vulnerable,” the CGFD said.

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