Google to help Philippine weed out abusive, illegal lenders

MANILA, Philippines — The Securities and Exchange Commission (SEC) has sought the help of technology giant Google in weeding out illegal and abusive lending practices in the Philippines.

Google agreed to tighten the requirements in the Philippines for developers of personal loan apps starting May 11, making it the third country to face stricter rules for lending apps, joining India and Indonesia.

Thus, Google will require developers offering personal loans in the Philippines to submit a Personal Loan App Declaration, and submit necessary documentation before they could publish apps on the Google Play Store.

SEC chairperson Emilio Aquino said the additional requirements would help protect borrowers in the country.

“We are positive that the additional requirements imposed by Google for developers of personal loan apps targeting users in the Philippines will serve as another layer of protection for Filipino borrowers and deterrence against predatory lending,” Aquino said.

“We thank Google for supporting our efforts to combat illegal and abusive lending and thereby preserve the financing and lending industry’s integrity, and provide Filipinos secure and accessible financing options.”

In the declaration form, developers shall state that they are registered with and duly licensed by the SEC to operate an online lending platform (OLP) or to perform lending-based crowdfunding activities, such as peer-to-peer lending, or to act as a crowdfunding intermediary.

Also, app developers shall likewise provide confirmation that their business is legal and an undertaking that the app is in compliance with all applicable laws.

Those without proper declaration and license attribution will be removed from the Google Play Store.

The move is part of the SEC’s efforts to crack down on illegal and abusive lending in the Philippines.

Republic Act 9474, or the Lending Company Regulation Act of 2007, requires persons or entities operating as lending companies to register as corporations and to secure from the SEC the necessary authority to operate.

Likewise, Republic Act 8556 or the Financing Company Act of 1998 requires financing companies to register with the SEC as corporations and to secure separately from the SEC an authority to operate as such.

Under SEC Memorandum Circular 19, Series of 2019, the SEC further requires financing and lending companies to register their online lending platforms, disclose their corporate names, SEC registration numbers, and certificate of authority numbers in platforms and advertisements.

Aquino said the SEC sought the help of Google in May 2019 to address the proliferation of unregistered personal loan apps. Aside from reporting and requesting for the removal of unlicensed lending apps from the Google Play Store, the SEC has enjoined the US-based technology giant to verify the legitimacy of lending and financing companies looking to develop and publish their apps.

To date, the SEC has revoked the registration of more than 2,000 lending and financing companies that failed to secure their requisite licenses, and canceled the licenses of 37 financing and lending companies due to various violations of applicable rules and regulations.

In addition, the SEC ordered 72 online lending platforms to cease operations for lack of authority to operate as a lending or financing company.

In November 2021, the SEC imposed a moratorium on new online lending platforms while it drafts guidelines on the registration and licensing of OLPs. Under SEC Memorandum Circular 10, Series of 2021, only those registered as of Nov. 2, 2021 may operate and be used for online lending or financing, subject to strict monitoring.