Many online lending operators in the Philippines often resort to public shaming against delinquent borrowers. Although this tactic often works in obtaining repayment, public shaming, in theory and in practice, is both unethical and illegal.
In this regard, authorities, lawmakers and concerned stakeholders are taking steps to eliminate this unscrupulous practice. The National Privacy Commission (NPC) is seeking to impose administrative fines on violators.
To this end, Tarlac 2nd district Rep. Victor Yap has filed a bill that would amend the Data Privacy Act of 2012. Foremost in the bill is the explicit power of NPC to mete out administrative fines of not more than ₱5 million. The fine is intended to protect the privacy of borrowers while promoting the values of accountability, compliance and ethics in handling personal data to lenders.
For their part, the Lenders Alliance, Inc. hails the efforts of government agencies like the NPC, the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP) to clean the industry and crack down on illegal lenders.
The Lenders Alliance has crafted a series of regulations from within the organization to eradicate public shaming in their industry.
“Many ‘sharks’ are still out there, misusing personal information for their convenience and taking the steps by cleaning the industry from these unethical companies is a must, to protect both customers and legitimate lenders,” noted Michael Bréjean, Lenders Alliance Inc.’s sustainability and public relations officer.
Since it is not easy to secure a criminal conviction in most of these case, these administrative fines will compel violators to be more accountable in handling personal data and even encourage them to hire a data privacy officer, noted National Privacy Commissioner Raymund E. Liboro.
The Lenders Alliance sees these developments as a positive signal for the industry. The group views the new data privacy regulation from NPC and SEC and remains supportive of measures taken and committed to reinforcing, protecting and handling personal information according to established guidelines.
“Hasty decisions can kill the much-needed financial industry in the Philippines. The key is to use data as prevention. Data help us to take the decision to lend or not, so we can lower our risks and thus, our interest rate. The data collected, however, must not be used for collection purposes. This is intolerable and tantamount to blackmail,” Bréjean pointed out.
The Lenders Alliance believes that there is a need for further regulations and being stakeholders in the industry, they have expressed their willingness to provide whatever assistance they can.
Bréjean noted that in Europe and in France in particular, governments are working with industry leaders to understand the context and impact of potential laws and use the knowledge that is shared to them by stakeholders to make their own informed decisions.
“We are setting up criteria within the Alliance that are working. Simple benchmark, analysis, training can make all the difference. As a trustworthy institution of the industry, we are willing to share our know-how with the government agencies” Bréjean concluded.