LENDING and financing companies Tala Philippines and Global Dominion have expressed support for proposed Securities and Exchange Commission (SEC) rules requiring the accreditation and closer supervision of third-party debt collection agencies, citing the need to strengthen accountability and protect borrowers.
In separate statements issued on Oct. 16 and Oct. 22, respectively, Tala and Global Dominion backed the SEC’s proposed framework covering the accreditation, disclosure, and oversight of third-party collection agencies engaged by financing and lending companies.
Under the draft rules, only SEC-accredited third-party collection agencies and the internal collection agents of financing and lending companies would be allowed to undertake debt collection activities.
Accredited agencies would be included in a publicly accessible SEC registry, allowing borrowers to verify their accreditation status. Accreditation would be valid for three years.
The proposed framework also provides for penalties against collection agencies found to have engaged in unfair debt collection practices, as well as financing and lending companies that improperly engage unaccredited or undisclosed collection agencies.
In its statement, Tala Philippines welcomed the proposal, saying stronger oversight would help promote responsible debt collection practices and improve transparency for borrowers.
“Tala Philippines commends the Securities and Exchange Commission for releasing its framework on the mandatory accreditation of third-party collection companies for public comment,” the company said.
Tala said maintaining a safe and inclusive financial ecosystem requires shared but proportionate responsibility among regulators, creditors, collection companies, and consumers.
It added that the proposed measures would allow borrowers to verify legitimate collection companies and obtain information about their previous collection practices.
“Access to relevant official information empowers borrowers to make informed financial choices and hold unincorporated and/or non-compliant debt collectors accountable,” the company said.
Tala also cited its Global Debt Collection Dignity Initiative, which promotes its Debt with Dignity principles in the Philippines.
Meanwhile, Global Dominion President and Chief Executive Officer Samuel Cariño said the proposed rules would help establish clearer standards for financing companies and their collection partners.
“In line with this commitment, we support the SEC’s draft circular on the accreditation, disclosure, and oversight of collection agencies,” Mr. Cariño told BusinessWorld in an Oct. 22 e-mail.
He said the proposed requirements would strengthen oversight of how financing companies select, disclose, and monitor collection partners, whose interactions with borrowers also reflect on the lenders they represent.
“Clear and consistent industry standards can promote accountability and encourage fair collection practices across the lending sector,” Mr. Cariño said.
He added that financing companies should ensure fair treatment of borrowers, including when collection activities are handled by third-party partners.
“Financing is a partnership, and the trust borrowers place in us must be honored in every interaction, including those carried out by partners on our behalf. We welcome clear and consistent standards that promote accountability and help ensure borrowers are treated fairly,” he said.
Global Dominion, which has more than 57,000 active borrowers and over 170 branches nationwide, said it regularly reviews its collection arrangements for compliance with existing SEC regulations and data privacy requirements.
The company also conducts financial consumer protection and data privacy seminars for employees and collection partners and provides borrowers with information on how to contact its customer experience department.
Mr. Cariño said Global Dominion would study the proposed circular and participate in the SEC’s consultation process.
“We expect our collection partners to uphold the same standards of professionalism, accountability, and fair borrower treatment that Global Dominion strives to provide. Beyond regulatory compliance, we are committed to responsible lending that supports access to financing for Filipinos, especially MSMEs (micro, small, and medium enterprises),” he said.
The SEC released the draft circular for public comment on Sept. 30, proposing a regulatory framework that would bring third-party collection agencies under its direct supervision and establish uniform standards for debt collection practices.
The proposal includes fines ranging from P60,000 to P200,000 for unfair debt collection practices, with repeated violations potentially resulting in the revocation of accreditation.
Financing and lending companies could also face fines of up to P2 million for improperly engaging unaccredited or undisclosed collection agencies, with repeated violations potentially leading to the suspension or revocation of their authority to operate.
The SEC set Oct. 15 as the deadline for submitting comments on the draft rules. — Alexandria Grace C. Magno