SEC issues draft guidelines on accreditation of third-party debt collection agencies
The Securities and Exchange Commission (SEC) is looking at imposing accreditation standards among third-party collection agencies (TPCA) to enhance borrowers’ protection against abusive lending practices.
The Commission on September 30 issued for public comment the draft memorandum circular providing for the accreditation, disclosure, and oversight of TPCAs engaged by financing and lending companies.
TPCAs refer to stock corporations registered with the SEC engaged by financing and lending companies to perform debt collection services.
The draft rules aim to establish a regulatory framework that will bring TPCAs under the Commission’s direct supervision and set uniform standards of conduct for debt collection to better protect borrowers from abusive collection practices.
Accreditation
Under the draft rules, only SEC-accredited TPCAs, in addition to internal collection agents of financing and lending companies, may engage in debt collection activities.
To secure accreditation, TPCAs shall file an application with the SEC online system. Such accreditation will be valid for three years.
The agency will be included in the Commission’s registry of accredited TPCAs published and regularly updated on the online SEC database.
An accredited TPCA may apply for renewal at least 30 days before the expiration of their existing accreditation. Otherwise, it will be subjected to monetary fines.
A TPCA may also be delisted from the registry if an order is issued by the SEC Financing and Lending Companies Department finding the TPCA liable for unfair debt collection practices, as provided under SEC Memorandum Circular No. 18, Series of 2019.
Final decision or resolution of administrative or criminal cases against a TPCA and other material, serious, repeated, or willful violations of this circular, related SEC issuances and applicable laws, rules, and regulations are further grounds for delisting.
TPCAs may likewise request for their voluntary delisting from the registry.
Violations, penalties
Under the draft rules, TPCAs may also face a penalty for late filing of accreditation renewal.
Further, TPCAs found to be involved in unfair debt collection practices, including unlawful house visits and use of system-generated and automated messages, may face fines ranging from P60,000 up to ₱200,000. They may face delisting and revocation of their accreditation upon fourth offense.
The Commission may also blacklist the directors and officers of TPCAs delisted for unfair debt collection practices or a material misrepresentation.
Additionally, financing and lending companies will also be subjected to fines for fraudulently engaging with non-accredited or non-disclosed TPCAs of up to ₱2 million. Fourth violation will result in the suspension or revocation of their certificate of authority and in exceptional cases, revocation of Articles of Incorporation.
The public may submit their comments on the proposed draft through the designated online form until October 15.
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