In the Philippines, the rise of Financial Technology (FinTech) has made credit more accessible than ever. However, this convenience has also opened the door to predatory lenders and unregistered entities. To protect yourself, it is crucial to verify that a lending company is not only registered but also holds a specific Certificate of Authority (CA) to operate as a lender.
Here is a comprehensive legal guide on how to verify the legitimacy of online lending platforms under Philippine law.
1. The Legal Framework: RA 9474
Under the Lending Company Regulation Act of 2007 (Republic Act No. 9474), no lending company shall conduct business unless it is a corporation and possesses a valid Certificate of Authority (CA) issued by the Securities and Exchange Commission (SEC).
The Two-Step Requirement
A legitimate lending company must have two distinct sets of credentials:
- Certificate of Incorporation: This proves the company is a registered legal entity.
- Certificate of Authority (CA): This specifically grants the entity the legal power to engage in lending activities.
Important Note: Many "loan sharks" show a business permit or a DTI registration to appear legitimate. These are insufficient. Without an SEC-issued CA, a lending operation is illegal.
2. Step-by-Step Verification Process
The SEC maintains a public, real-time database to help consumers verify the status of lenders. Follow these steps:
Phase A: Use the SEC Official Website
- Visit the SEC Website: Go to sec.gov.ph.
- Navigate to Public Information: Look for the "Lending & Financing Companies" section.
- Check the "List of Lending Companies": The SEC regularly updates a PDF or Excel list titled "List of Lending Companies with Certificate of Authority."
- Verify the Online Lending Platform (OLP): Since many companies use "apps" with names different from their corporate names (e.g., "FastCash" might be owned by "ABC Lending Corp"), ensure you check the registered OLP names specifically listed by the SEC.
Phase B: Check the SEC Corporate Docs
If you have the company’s name, you can use the SEC Check App or the SEC Express System to verify if their status is "Active." Look specifically for the CA Number, which should be prominently displayed on the company’s website and in the "About Us" section of their app.
3. Red Flags of Unlicensed Lenders
If an online lender exhibits these traits, they are likely operating outside the law:
- No SEC CA Number: They cannot provide a Certificate of Authority number when asked.
- Vague Corporate Name: The app name does not link back to a registered corporation.
- Abusive Collection Practices: They threaten to shame you to your contact list (a violation of SEC Memorandum Circular No. 18, s. 2019).
- Undisclosed Fees: They do not provide a "Disclosure Statement" before the loan is perfected (a violation of the Truth in Lending Act).
4. What to Do if You Encounter an Illegal Lender
If you discover a company is lending without a CA, or if a licensed company is engaging in predatory behavior, you should file a formal complaint with the SEC Enforcement and Investor Protection Department (EIPD).
| Action | Contact / Method |
|---|---|
| Email Complaint | epd@sec.gov.ph |
| Online Form | SEC i-Message portal |
| Data Privacy Violations | National Privacy Commission (NPC) |
5. Summary Checklist for Borrowers
Before clicking "Accept" on any loan app, verify the following:
- Is the corporate name on the SEC List of Lending Companies?
- Does the app name match the Registered Online Lending Platforms list?
- Is there a valid Certificate of Authority (CA) Number?
- Is there a clear Disclosure Statement showing interest, fees, and penalties?
Protecting yourself begins with due diligence. In the Philippine jurisdiction, "Ignorantia legis neminem excusat" (Ignorance of the law excuses no one)—but for the borrower, knowledge of the lender's status is your best defense against financial fraud.
Would you like me to help you draft a formal letter of inquiry or a complaint to the SEC regarding a specific lending entity?