The Securities and Exchange Commission (SEC) expressed the hope that the cap on credit card charges will also be applied to consumer and payday loans offered by lending and financing firms.
“The capping of credit card charges is a timely and much-needed measure to promote responsible lending and ease the financial burden of consumers and micro, small and medium enterprises amid the Covid-19 pandemic,” SEC Chairman Emilio B. Aquino said.
“We are hopeful that the Monetary Board will likewise consider soon the Commission’s proposal for similar limits on interest rates, fees and other charges imposed by lending and financing companies on consumer and payday loans, as part of our efforts to put an end to predatory and other abusive lending practices,” he said.
In October 2019, the SEC asked the Monetary Board, through BSP Governor Benjamin E. Diokno, to consider prescribing a ceiling on interest rates, fees and other charges that lending and financing companies may impose.
On September 25, the Bangko Sentral ng Pilipinas (BSP) announced that the Monetary Board approved an annual interest rate ceiling of 24 percent on all credit card transactions effective November 3.
The new policy also provides that interest rates or finance charges on the unpaid outstanding credit card balance of a cardholder should not exceed 2 percent per month.
For credit card installment loans, credit card issuers may only charge monthly add-on rates of a maximum of 1 percent. Meanwhile, no other charge or fee may be imposed or collected on credit card cash advances except for a maximum processing fee of P200 per transaction.
The SEC said it is working closely with the BSP to push for interest rate caps for lending and financing companies, providing the necessary data and studies on the matter.
Section 7 of Republic Act 9474, or the Lending Company Regulation Act of 2007, allows lending companies to grant loans in amounts and reasonable rates and charges as may be agreed upon with borrowers.
Steep interest rates and penalty charges have been the subject of most of the complaints filed against financing and lending companies. In this light, the SEC has invoked the Monetary Board’s authority to regulate interest rates imposed on consumer loans and payday loans offered by financing and lending companies.