SEC lifts moratorium on new online lending platforms

After a nearly five-year freeze aimed at weeding out predatory digital lenders, the Securities and Exchange Commission (SEC) is officially reopening the door to new online lending apps—but under a drastically overhauled regulatory playbook designed to protect Filipino borrowers from harassment and hidden costs.

Under the newly issued SEC Memorandum Circular (MC) No. 20, Series of 2026, signed July 7, the corporate regulator announced it will lift its moratorium on Online Lending Platforms (OLPs) starting August 1, 2026.

The moratorium on new OLPs and FLCs has been in place since November 5, 2021 under SEC Memorandum Circular No. 10, series of 2021.

In its circular, the SEC said that the decision to reopen the market is an effort to drive financial inclusion and economic activity through digital means, provided that companies align with ironclad consumer safeguards.

"The Commission recognizes the need to lift the moratorium... in order to promote responsible innovation, stimulate economic activity among financing and lending companies, and ensure that the operation of OLPs is aligned with consumer protection, market integrity, prudential objectives, financial inclusion, ease of market access, and alignment with the global trend of digitalization," the agency said.

However, the SEC clarified that lifting the freeze does not mean an automatic green light for tech startups or existing lending firms.

To gain market entry, applicants must pass a rigorous licensing process that evaluates capitalization, operational integrity, and compliance infrastructure.

To prevent a relapse into the predatory practices of the early 2020s, SEC’s MC No. 20 introduces strict transparency and operational limits:

Mandatory Full Disclosure: Before a loan can be approved or disbursed, lending apps must provide an unambiguous, transparent breakdown of the loan. This includes the exact principal amount, interest rates, service fees, penalties, and a clear repayment schedule.
Explicit, Informed Consent: The days of accidental debts are over. Lenders are strictly prohibited from automatically releasing loans or auto-renewing existing debts. Borrowers must actively review and expressly confirm they understand and accept the final terms on the digital interface before any funds change hands.
Strict Contact List and Privacy Rules: Addressing one of the most widespread complaints among digital borrowers—the unauthorized harvesting of phone contact lists—the circular builds heavily on the Data Privacy Act of 2012 (RA 10173). Lenders cannot treat a borrower’s friends, family, or emergency contacts as guarantors unless those specific individuals have legally consented in writing. Contacting third parties for shaming or unauthorized collection efforts remains strictly prohibited.
Limits on App Proliferation: To guarantee effective regulatory oversight and curb corporate fragmentation (where one company operates dozens of clone apps to evade bad reviews), the SEC framework limits the total number of platforms an entity can deploy (capped at five) while standardizing a Single Certificate of Authority policy.
Higher Capitalization Barriers: The final rules reinforce stricter capital thresholds for digital-first operations, linking required paid-up capital to the scale and volume of platforms a firm operates to ensure that only financially sound institutions manage public credit.

Moreover, to eliminate ghost operators and fake apps, all approved digital lenders must formally record and disclose their official websites, mobile applications, and customer service channels with the commission.

The SEC said that it has significantly beefed up administrative penalties for non-compliance. Companies caught utilizing deceptive user interfaces (such as pre-ticked consent boxes or obscure opt-out options), violating fair debt collection guidelines, or deploying unrecorded apps face immediate suspension, massive financial fines, or the total revocation of their corporate registration. — BM, GMA News