SEC hopes BSP will cap consumer and payday loan rates too – Manila Bulletin

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The Securities and Exchange Commission (SEC) wants Bangko Sentral to also limit fees for consumer loans and payday loans offered by loan and finance companies.

This after the Commission welcomed the central bank’s decision to set an annual interest rate cap of 24% on all credit card transactions as of November 3, 2020.

The new policy also provides that interest rates or finance charges on a cardholder’s outstanding credit card balance must not exceed 2% per month.

“Capping credit card fees is a timely and essential measure to promote responsible lending and ease the financial burden on consumers and micro, small and medium-sized businesses in the context of the COVID-19 pandemic,” said the SEC chairman Emilio B. Aquino.

He added that “we hope that the Monetary Council will also soon consider the Commission’s proposal for similar limits on interest rates, fees and other charges imposed by lending and finance companies on consumer loans. and payday, as part of our efforts to end predatory and other abusive lending practices.

In October 2019, the SEC asked the Monetary Council, through BSP Governor Benjamin E. Diokno, to consider setting a cap on interest rates, fees, and other charges that bond companies. loan and financing may impose.

The Commission has since worked closely with the central bank to push for interest rate caps for loan and finance companies, providing the necessary data and studies on the issue.

Article 7 of Republic Law 9474, or the Loan Company Regulation Law 2007, authorizes loan companies to provide loans for amounts and reasonable rates and fees agreed to with borrowers.

The same provision, however, authorizes the Monetary Board, in consultation with the SEC and industry, to prescribe interest rates that may be warranted by prevailing economic and social conditions.

Article 5 of Republic Law No.8556 or the Finance Companies Law of 1998 also empowers the Monetary Council, in consultation with finance companies and the SEC, to prescribe the maximum rate (s) for remittances. purchase, rents, fees, services and other charges from finance companies.

Loan and finance companies are currently allowed to freely agree with borrowers on the terms and conditions of their loan agreement, including the taxable interest rate and other charges such as transaction fees and late penalties. payment, in accordance with the three-decade-old Central Bank. of Philippine Circular No. 905-82 which suspended the Usury Act. High interest rates and penalties have been the subject of most complaints against finance and loan companies.

With this in mind, the SEC invoked the authority of the Monetary Board to regulate the interest rates charged on consumer loans and payday loans offered by finance and loan companies.



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