THE SECURITIES and Exchange Commission (SEC) is proposing to require third-party debt collection agencies to secure accreditation before collecting debts for financing and lending companies.
The corporate regulator said on Friday that it issued for public comment on Sept. 30 a draft memorandum circular covering the accreditation, disclosure, and oversight of third-party collection agencies (TPCAs) engaged by financing and lending companies.
Under the draft rules, only SEC-accredited TPCAs, aside from the internal collection agents of financing and lending companies, would be allowed to conduct debt collection activities.
TPCAs are defined under the proposal as stock corporations registered with the SEC that are engaged by financing and lending companies to provide debt collection services.
“The draft rules aim to establish a regulatory framework that will bring TPCAs under the Commission’s direct supervision and set uniform standards of conduct for debt collection to better protect borrowers from abusive collection practices,” the SEC said.
TPCAs seeking accreditation would have to submit applications through the SEC’s online system. Accreditation would be valid for three years, while approved agencies would be included in a publicly available registry maintained by the Commission.
An accredited TPCA may apply for renewal at least 30 days before its accreditation expires. Failure to do so could result in monetary fines, according to the draft rules.
The SEC could also remove a TPCA from the registry if its Financing and Lending Companies Department finds the agency liable for unfair debt collection practices under SEC Memorandum Circular No. 18, Series of 2019.
Final decisions or resolutions in administrative or criminal cases against a TPCA, as well as material, serious, repeated, or willful violations of the proposed circular, related SEC issuances, or applicable laws and regulations, could also be grounds for delisting.
TPCAs may also request voluntary removal from the registry.
Under the proposal, TPCAs found involved in unfair debt collection practices, including unlawful house visits and the use of system-generated and automated messages, could face fines ranging from P60,000 to P200,000.
A fourth offense could result in delisting and revocation of the agency’s accreditation.
The SEC could also blacklist directors and officers of TPCAs delisted for unfair debt collection practices or material misrepresentation.
Financing and lending companies could likewise face fines of as much as P2 million for fraudulently engaging non-accredited or undisclosed TPCAs, according to the proposed rules.
A fourth violation could result in the suspension or revocation of the company’s certificate of authority and, in exceptional cases, revocation of its articles of incorporation.
The SEC is accepting public comments on the proposed rules until Oct. 15 through a designated online form. — Alexandria Grace C. Magno