The Securities and Exchange Commission (SEC) has announced the end of its five-year moratorium on new online lending platforms (OLPs), effective August 1. This regulatory shift introduces a new framework designed to ensure safer lending practices.
New Framework Details and Compliance
This change comes with the release of Memorandum Circular No. 20, Series of 2026 (MC 20). It sets forth the requirements for disclosure, market conduct, and capital for financing companies (FCs) and lending companies (LCs) operating digital credit systems.
SEC Chairperson Francis Lim emphasized the need for innovation while safeguarding consumers against predatory lending. The guidelines aim to create a balanced environment for both lenders and borrowers.
The guidelines are designed to prevent predatory and unfair lending practices through enhanced consumer safeguards and reporting mechanisms.
Francis Lim, Chairperson, SEC
- New companies must submit business plans within 60 days of receiving their operating certificate.
- Existing firms have one year to comply with new capital requirements if they expand operations.
Importantly, the lifting of the moratorium does not mean automatic approval for new platforms. Only licensed companies meeting the new MC 20 criteria can operate borrower-facing OLPs.
Capital Requirements and Operational Limits
To manage risks associated with digital lending, the SEC has introduced tiered capital requirements. Financing and lending companies are limited to operating five OLPs to mitigate systemic risks.
The capital thresholds are as follows:
- Financing Companies: P20 million for one OLP, scaling up to P100 million for five.
- Lending Companies: P10 million for one OLP, with a maximum of P50 million for five OLPs.
For companies that do not operate an OLP, the minimum capital is set at P15 million for financing companies and P5 million for lending companies.
New Regulatory Environment
The SEC has implemented a Single Certificate of Authority (CA) policy, streamlining the licensing process. This means each financing or lending company will receive just one certificate for all activities.
All online lending platforms will be recognized as operational channels of the parent company, requiring proper registration and disclosure of platform names.
Additionally, companies operating OLPs must register with the Credit Information Corporation (CIC) to ensure compliance with the Credit Information System Act.