In recent years, the Philippines has seen a surge in Financial Technology (FinTech), specifically through Online Lending Platforms (OLPs). While these apps provide quick access to credit, the industry has also been plagued by predatory lending, harassment, and data privacy violations. To protect the public, the Securities and Exchange Commission (SEC) strictly regulates these entities.

Understanding the legal requirements and knowing how to identify licensed platforms is essential for any borrower.

The Regulatory Framework

Under Philippine law, lending and financing companies must be registered with the SEC. The primary laws governing these activities include:

Republic Act No. 9474 (Lending Company Regulation Act of 2007): Requires all lending companies to be established as corporations and obtain a Certificate of Authority (CA) from the SEC.
Republic Act No. 5980 (Financing Company Act of 1998): Regulates companies that extend credit facilities to consumers and industrial, commercial, or agricultural enterprises.
SEC Memorandum Circular No. 19 (Series of 2019): Explicitly requires all lending and financing companies to register their OLPs as business names and report them to the Commission.

How to Verify a Licensed Online Lending App

The SEC maintains a dynamic list of licensed entities. To ensure an app is legal, it must possess two distinct certifications:

Certificate of Registration (CR): This proves the company is a legally incorporated entity in the Philippines.
Certificate of Authority (CA): This is the more critical document. It specifically grants the company the legal power to operate as a lender or finance company. A company may have a CR but no CA; without a CA, lending operations are illegal.

Steps for Verification:

Check the SEC Website: The SEC regularly updates its "List of Lending Companies and Financing Companies with Certificates of Authority."
Cross-Reference the App Name: Some companies operate multiple apps under different brand names. The SEC requires companies to disclose all "Business Names" (the apps) associated with their CA.
Verify the Corporate Name: The "About Us" section of a legitimate app should clearly state the registered corporate name and its CA number.

Key Protections for Borrowers

Registered OLPs are bound by strict conduct and transparency rules. If an app is licensed, it must comply with:

Truth in Lending Act (RA 3765): Before a loan is perfected, the lender must provide a Disclosure Statement clearly showing the cash proceeds, interest rates, service charges, and the total cost of credit.
Ceiling on Interest Rates (BSP Circular No. 1133): For small-value, short-term loans, the Bangko Sentral ng Pilipinas (BSP) has set limits:
Nominal Interest Rate: Maximum of 6% per month (approx. 0.2% per day).
Effective Interest Rate (EIR): Maximum of 15% per month (includes all fees).
Penalties for Non-payment: Capped at 0.1% per day of the unpaid principal.
Data Privacy Act of 2012: Apps cannot legally "harvest" your entire contact list to harass your friends and family. This is a common tactic used by illegal, unlicensed apps.

Warning Signs of Unlicensed Apps

If an app is not on the SEC-licensed list, it is likely a "predatory" lender. Common red flags include:

Harassment and Debt Shaming: Threatening to contact your phone contacts or posting your personal details on social media.
Hidden Fees: Large "processing fees" deducted immediately from the loan amount.
Missing Documentation: No clear Disclosure Statement or SEC CA number provided within the app.
Permission Requests: Asking for unnecessary access to your photos, contacts, and social media accounts.

Legal Remedies for Victims

If you have been victimized by an unlicensed or abusive lending app, you can take the following legal actions:

SEC Corporate Governance and Finance Department (CGFD): File a formal complaint for violations of the Lending Company Regulation Act.
National Privacy Commission (NPC): Report the app for unauthorized use of personal data and harassment.
PNP Anti-Cybercrime Group (ACG) or NBI Cybercrime Division: If the lender is engaging in online threats, Coercion (Revised Penal Code), or Cyber Libel.

Note: The SEC frequently issues "Cease and Desist Orders" (CDOs) and revokes the licenses of companies that violate fair debt collection practices. Always consult the latest SEC advisories to see if a company’s license has been suspended or revoked.