SEN. Sherwin Gatchalian has pledged to pass a law criminalizing abusive debt collection practices by certain online lending platforms.
Gatchalian warned financial service providers on Sunday against continuing their illegal acts.
The growing number of consumer complaints against online loans or loan sharks amid the pandemic was “quite worrying,” Gatchalian said.
The deputy chairman of the Senate Banking, Financial Institutions and Currency Committee lamented loan sharks and other financial crooks who know they are not covered by financial regulators.
He recently tabled Senate Bill (SB) 2287 or the “Financial Products and Services Consumer Protection Act” bill which prohibits financial service providers from using collective abusive practices or debt collection. .
SB 2287 also requires online lenders to respect the privacy and protect the data of their customers.
Some new loan companies have become more aggressive in collecting debts, Gatchalian said in a statement.
“Hindi sila titigil hangga’t walang batas na magpapanagot sa mga maling gawain nila (they won’t stop unless there is a law to hold them accountable),” he said.
Some of them slander their borrowers in order to collect payment, Gatchalian said.
The Securities and Exchange Commission recently shut down KingABC Lending Corp., the company behind the online lending platforms Pondo Loan, Start Loan, Green Loan, Loan Club and Familyhan Credit Corp. social media and various online platforms on an invented legal basis.
“Their liability should not be purely administrative, as some of the acts committed against financial consumers already constitute criminal liability, such as data privacy breaches and cyber-harassment to name a few,” Gatchalian said.
It took note of the 15,015 complaints received by the Consumer Empowerment Group of the BSP from the first to the third quarter of 2020, 63.3% more than those recorded in 2019, which amounted to only 9,250.
The figures do not include unreported cases, as some people and businesses have been discouraged from doing so due to insufficient action by the bank, regulatory agency or law enforcement, Gatchalian said.
SB 2287 puts a jail term of up to five years or a fine of up to P2 million.
Financial regulators such as the Bangko Sentral ng Pilipinas (BSP), the SEC and the Insurance Commission are authorized to impose “enforcement measures on their respective supervised financial service providers”.
Actions restrict the collection of excessive or unreasonable interest, fees or charges; and the imposition of fines, suspensions or penalties for non-compliance with the law.
He noted the “wide array of financial products and services following the Covid-19 pandemic, including the emergence of fraudsters victimizing those struggling with loss of income.”