SEC moves to tighten interest rate caps for lenders

The Securities and Exchange Commission (SEC) plans to recalibrate the ceilings on interest rates and other fees charged by financing and lending companies and their online lending platforms (OLPs) as part of efforts to protect consumers against predatory lending practices.

- By RICHMOND MERCURIO

The SEC has issued a draft circular to enforce a stricter limit on interest rates and other fees imposed by financing companies (FCs), lending companies (LCs) and their OLPs.

The ceiling will apply to unsecured general-purpose loans offered by FCs, LCs and their OLPs that do not exceed P20,000 and loan tenor not exceeding six months that are entered into, restructured or renewed beginning Dec. 1, 2025.

The commission earlier imposed an interest rate cap for lending and financing companies in 2022, as fixed by the Bangko Sentral ng Pilipinas pursuant to its authority under the Lending Company Regulation Act of 2007 and the Financing Company Act of 1998.

The regulation, however, applied only to unsecured general-purpose loans not exceeding P10,000 and payable up to four months.

The SEC’s proposal aims to better reflect current socioeconomic conditions, striking a balance between consumer protection and the competitiveness of duly licensed lending and financing companies.

“The number of borrowers struggling under excessive interest rates has continued to grow in recent years, as certain entities exploit the accessibility of online lending applications to trap our fellow kababayans in cycles of debt,” SEC chairperson Francis Lim said.