SEC lifts moratorium on online lending apps, sets strict framework for financing, lending companies
The Securities and Exchange Commission (SEC) has officially lifted the nearly five-year moratorium against new online lending platforms (OLPs), as it introduced a strict and comprehensive framework governing the operation of financing and lending companies in the country.
The Commission on July 7 issued Memorandum Circular No. 20, Series of 2026 (MC 20), providing the Guidelines Prescribing Prudential Disclosure and Market Conduct Requirements for Financing and Lending Companies and Lifting the Moratorium on Online Lending Platforms.
The memorandum circular applies to all newly registered, existing, and prospective FCs and LCs that make use of digital applications, mobile apps, or web-based systems to offer credit to the public.
The guidelines primarily seek to strengthen consumer protection through enhanced disclosure requirements, responsible lending practices, fair collection standards, and increased regulatory oversight of digital lending activities.
“As we open the doors to new OLPs, we are making it clear that the SEC welcomes and promotes financial innovation but will not tolerate the proliferation of predatory and unfair lending practices,“ SEC Chairperson Francis Lim said.
“Our goal is to foster a safe, transparent, and competitive online lending environment where both legitimate businesses and Filipino consumers can thrive through necessary consumer safeguards and reporting mechanisms outlined in this new memorandum circular,“ he added.
Moratorium lifted
The moratorium on new OLPs, which has been in place since November 5, 2021, will be lifted effective August 1.
The lifting of the moratorium does not mean the automatic or unconditional approval of any OLP. Only duly licensed FCs and LCs that comply with the requirements of MC 20 may operate borrower-facing OLPs.
New companies that will be incorporated as FCs and LCs shall submit their business plan within 60 days from the date of issuance of its certificate of authority to operate as an FC or LC. Those operating an OLP shall disclose and maintain accurate and updated information regarding each OLP, including its name, borrower-facing identity, website, mobile application, domain names, and platform links, among others.
The SEC is authorized to refuse, suspend, delist, reclassify, or modify the recording of an OLP if found to be in violation of the guidelines or other applicable laws, rules, and regulations.
New capital requirements
Pursuant to the lifting of the moratorium, the SEC is imposing new paid-up capital requirements for FCs and LCs seeking to expand its operations or open new physical branches. This seeks to align regulatory requirements with the operational scale and risks associated with digital lending operations.
FCs that do not operate any OLP shall maintain a minimum paid-up capital of ₱15 million, while LCs will be subject to ₱5 million.
For FCs with one OLP, the minimum paid-up capital is ₱20 million; ₱40 million for two OLPs; ₱60 million for three OLPs; ₱80 million for four OLPs; and ₱100 million for five OLPs.
Meanwhile, LCs must maintain a minimum paid-up capital of ₱10 million for one OLP, and an additional ₱10 million for every new OLP. LCs may maintain up to five OLPs at a paid-up capital of ₱50 million.
To limit systemic market risks and prevent excessive consumer debt exposure, the SEC has instituted a limit of five OLPs per FC or LC.
FCs and LCs remain fully accountable for all lending activities conducted through OLPs, with the latter merely serving as their borrower-facing operational channels.
Existing FCs and LCs are not required to adjust their capital immediately, unless they expand their operations. Should they decide to expand their operations, existing FCs and LCs have one year from the effectivity of MC 20 to comply with the new capital requirements.
Those that do not intend to comply with the capital requirements may reduce and disclose to the Commission only those OLPs supported by their existing capital level.
Any OLP not so disclosed shall be deemed delisted and may no longer be operated or used. During the transition period, FCs and LCs shall not introduce or operate additional OLPs unless they have already fully complied with the applicable paid-up capital requirements.
Single license policy
The guidelines also adopt a Single Certificate of Authority (CA) policy, wherein each FC or LC will be issued only one CA covering its financing or lending activities, regardless of the number of its branches or geographical location. Separate CAs per branch office will no longer be issued.
The CA shall likewise cover all financing or lending activities conducted by the FLC through any OLP or similar borrower-facing channel that the company operates, owns, or controls. No separate CA shall be issued for OLP. OLPs shall not be treated as separate legal entities, branches, or independently authorized units, but as operational channels of the FC or LC.
All OLP names used by an FC or LC shall be duly registered and disclosed to the Commission as business names or trade names of the FC or LC in accordance with the Commission‘s applicable Guidelines and Procedures on the Use of Corporate and Partnership Names.
Moving forward, the Commission may establish a centralized recording or registry system for branch offices to facilitate monitoring, supervision, and consumer protection.
In addition, all FCs and LCs operating OLPs will be required to register with the Credit Information Corporation (CIC) and regularly submit complete and accurate credit data information, in accordance with Republic Act No. 9150, otherwise known as the Credit Information System Act.
FCs and LCs are encouraged to use CIC data in their internal credit evaluation processes, consistent with their risk-based underwriting policies and business model.
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