November 1, 2025 | 12:00am
MANILA, Philippines — The Securities and Exchange Commission (SEC) plans to recalibrate the ceilings on interest rates and other fees charged by financing and lending companies and their online lending platforms (OLPs) as part of efforts to protect consumers against predatory lending practices.
The SEC has issued a draft circular to enforce a stricter limit on interest rates and other fees imposed by financing companies (FCs), lending companies (LCs) and their OLPs.
The ceiling will apply to unsecured general-purpose loans offered by FCs, LCs and their OLPs that do not exceed P20,000 and loan tenor not exceeding six months that are entered into, restructured or renewed beginning Dec. 1, 2025.
The commission earlier imposed an interest rate cap for lending and financing companies in 2022, as fixed by the Bangko Sentral ng Pilipinas pursuant to its authority under the Lending Company Regulation Act of 2007 and the Financing Company Act of 1998.
The regulation, however, applied only to unsecured general-purpose loans not exceeding P10,000 and payable up to four months.
The SEC’s proposal aims to better reflect current socioeconomic conditions, striking a balance between consumer protection and the competitiveness of duly licensed lending and financing companies.
“The number of borrowers struggling under excessive interest rates has continued to grow in recent years, as certain entities exploit the accessibility of online lending applications to trap our fellow kababayans in cycles of debt,” SEC chairperson Francis Lim said.
“Through responsive policies and stronger enforcement actions, the SEC will ensure that lending practices remain fair, transparent and aligned with consumer protection standards, while promoting the continued viability and competitiveness of legitimate financing and lending companies,” he said.
Under the proposed rules, the SEC is fixing the maximum nominal interest rate at six percent per month, or about 0.2 percent per day.
The effective interest rate will likewise be limited to 10 percent per month, or about 0.33 percent per day, which will include the nominal interest rate and all other applicable fees and charges, such as processing fees, service fees, notarial fees, handling fees and verification fees, among others, but shall exclude fees and penalties for late and non-payment on outstanding scheduled amounts due.
Meanwhile, lending and financing companies may only charge penalties of up to five percent per month for late payment or non-payment on outstanding scheduled amounts due.
A total cost cap of 100 percent of the total amount borrowed, applying to all interest, other fees and charges, and penalties, regardless of time the loan has been outstanding, will likewise be imposed.
Under the draft circular, non-compliance will result in penalties of P50,000 on the first offense and P100,000 on the second offense for FCs and P25,000 on the first offense and P50,000 on the second offense for LCs.
Third offense for both FCs and LCs will result in a fine of not less than twice the penalty for the second offense but not more than P1 million, and/or suspension of financing and lending activities for a period of 60 days as well as revocation of its secondary license, as appropriate for each circumstance.
Depending on the gravity of the offense, the SEC may also proceed with the suspension or revocation of the company’s primary registration.
The policy on ceilings on interest rates and other fees will be subject to periodic review to ensure it remains current with changes in law, industry needs and regulatory requirements.
“To uphold consumer protection while ensuring the continued viability and competitiveness of legitimate FCs and LCs operating within the regulated sector, and promote financial inclusion, the commission finds it necessary to recalibrate the imposed ceiling on interest rates that would better reflect current socioeconomic realities and ensure that financial consumers are adequately protected from unconscionable interest rates and predatory lending practices,” the SEC said.
The SEC said the issuance of the draft circular is in line with its regulatory and supervisory authority over FCs, LCs and their OLPs as well as its power under the Financial Products and Services Consumer Protection Act to determine the reasonableness of interest, charges and fees offered by these companies.
All concerned stakeholders are requested by the commission to provide their comments, suggestions and inputs on or before Nov.14, 2025.
