THE Securities and Exchange Commission (SEC) is looking to introduce a unified lending identification (ULI) system to make it easier for borrowers to access credit and to prevent predatory lending and abusive debt collection practices.
“Since our national ID system is still not reliable, we intend to introduce the ULI to provide easy access to credit facilities through authenticated data,” SEC Commissioner Rogelio V. Quevedo said during a Senate committee hearing on Monday.
From January to Sept. 15, the SEC handled 5,415 public complaints involving financing and lending companies and their online platforms, he noted.
“Of this total, 3,570 complaints, or 66%, involve unfair debt collection practices or collection harassment. Among these, 3,315 complaints were filed against unregistered financing companies, lending companies, and online lending platforms (OLPs), while 435 complaints targeted unregistered entities and/or unrecorded OLPs,” he added.
He said unregistered online platforms are among the key concerns that should be addressed by law enforcement agencies.
“Actually, we want to report that the problem is the unrecorded, unregistered online platforms. These are the people, the institutions, that are the subject of complaints. These are the lending companies that are not registered with the SEC,” he said.
“I must note that while the SEC is empowered to conduct investigations, we have no police power. We cannot raid these institutions without enlisting the help of our law enforcement agencies,” he added.
As part of its ongoing monitoring, the SEC said enforcement measures have been carried out, including the issuance of show-cause letters, notices of deficiencies, assessment letters, walk-through examinations, desk reviews, and on-site audits.
While the commission issues show-cause orders and suspends or revokes the licenses of abusive lenders, some continue to operate. The SEC has sought coordination with the Philippine Association of Online Credit (PAOC) to strengthen enforcement.
“There was even one instance where PAOC referred about 20,000 complaints to us, and we discovered that many of these complaints were simply repetitions,” Mr. Quevedo said.
He said complaints against abusive lenders often come alongside cases of borrowers who refuse to pay back loans after filing complaints.
“There are abusive borrowers. They think that if they complain to the financial lending companies, they don’t need to pay. The SEC also needs to protect this industry because it caters to the unbanked sector.”
The commissioner said the SEC also intends to lift the moratorium on online lending platforms once the ULI is fully established and operational.
Apart from the proposed ID system, Mr. Quevedo said the commission is also exploring the use of blockchain technology as a centralized system to verify borrower information for transparency.
He said this will make it easier for consumers to access legitimate credit options and equip authorities with better tools to combat debt collection harassment and prevent abuses by unregistered lenders.
“This is necessary for transparent dissemination of information to borrowers and the public regarding loan products, interest rates, online lending platforms, and third-party service providers. We also intend to use artificial intelligence, as I mentioned, blockchain technology,” he said.
Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the ULI is a strategic initiative to improve credit access while curbing predatory lending and harassment.
“By giving borrowers a unique lending ID, it will allow lenders to better assess risk through verified and centralized data, which could lower borrowing costs and reduce default rates. It also strengthens borrower protection by deterring multiple overlapping loans and making abusive collection practices easier to monitor,” he said in a Viber message.
For his part, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the ULI system would reduce asymmetric information on borrowers, resulting in faster processing, reduced costs, and more loans disbursed.
“With better information available about borrowers, lenders can make improved credit decisions and manage credit risk more effectively. A more reliable credit scoring or vetting system would also help reduce nonperforming loans (NPLs) and improve loan collection processes,” he said in a Viber message.
