The Securities and Exchange Commission (SEC) is taking stronger action against predatory lending by proposing stricter limits on interest rates and fees charged by lending and financing companies, including their online lending platforms.
The proposed measure aims to protect borrowers from abusive practices while keeping legitimate lenders viable and competitive.
On October 30, the SEC released for public comment a draft memorandum circular titled “Recalibrated Ceilings on Interest Rates and Other Fees Charged by Financing Companies, Lending Companies, and their Online Lending Platforms.”
Under the proposal, a ceiling on interest rates and other fees will apply to unsecured general-purpose loans not exceeding ₱20,000, with a loan term of up to six months. The rule will cover all contracts entered into, renewed, or restructured starting December 1, 2025, whether through online or traditional channels.
The draft policy draws authority from Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act, which empowers the SEC to determine the reasonableness of interest rates and charges imposed by financial service providers.
This proposal builds on a 2022 SEC regulation — set in coordination with the Bangko Sentral ng Pilipinas (BSP) — that capped interest rates for smaller loans of up to ₱10,000 payable within four months. The new framework updates those limits to better reflect current economic realities.
“The number of borrowers struggling under excessive interest rates has continued to grow in recent years, as certain entities exploit online lending apps to trap our kababayans in cycles of debt,” said SEC Chairperson Francis Lim.
“Through responsive policies and stronger enforcement actions, the SEC will ensure that lending practices remain fair, transparent, and aligned with consumer protection standards, while promoting the continued viability of legitimate lenders,” he added.
Key Interest Rate and Fee Limits
- Maximum nominal interest rate: 6% per month (≈0.2% per day)
- Effective interest rate: 10% per month (≈0.33% per day), inclusive of all fees except penalties for late or missed payments
- Late payment penalties: Up to 5% per month on outstanding amounts
- Total cost cap: 100% of the total amount borrowed, covering all interest, fees, and penalties
The SEC will also conduct periodic reviews to ensure the ceilings remain responsive to industry and consumer needs.
Penalties for Non-Compliance
- Lending companies: ₱25,000 (1st offense), ₱50,000 (2nd offense)
- Financing companies: ₱50,000 (1st offense), ₱100,000 (2nd offense)
- 3rd offense: Fines up to ₱1 million, possible suspension (60 days) or revocation of license
The SEC Financing and Lending Companies Department is accepting public comments on the proposed circular until November 14, through an official Google Form link provided by the agency.
The move underscores the SEC’s ongoing campaign to ensure fair, transparent, and responsible lending in the Philippines’ rapidly evolving financial landscape.
