A significant shift in the regulation of online lending platforms in the Philippines is underway, as the central bank and the securities regulator explore a potential transfer of oversight.
The Securities and Exchange Commission (SEC) is actively proposing to hand responsibility for these rapidly growing platforms to the Bangko Sentral ng Pilipinas (BSP), citing mounting challenges in combating fraud within the sector.
SEC Commissioner Rogelio Quevedo revealed the agency submitted a formal position paper this year, acknowledging the complexities of overseeing nearly 6,000 online lending platforms – a number poised to surge to 10,000 if a current moratorium is lifted.
The SEC currently struggles to adequately monitor these platforms, dedicating approximately 80 personnel to a task that demands far greater resources. Their core expertise lies in securities trading and the regulation of larger companies, not the intricacies of the burgeoning online lending landscape.
BSP General Counsel Roberto Figueroa confirmed ongoing discussions with the SEC, stating the central bank is receptive to assuming greater control, but wants to ensure readiness before taking on the responsibility.
The BSP already possesses supervisory authority over credit-granting companies, making a transition of oversight a logical progression. Both agencies are considering whether new legislation or regulatory adjustments will be necessary to formalize any transfer.
Beyond online lending, the SEC is also responding to concerns raised by foreign fund managers regarding potential risks associated with investments in flood control projects.
The regulator is contemplating a new definition of “corporations vested with public interest,” aiming to impose stricter governance standards, including a requirement for a minimum percentage of independent directors on their boards.
This proposed rule would mirror existing requirements for listed companies, potentially requiring at least 10% of board members to be independent, ensuring greater accountability and transparency in projects of significant public concern.
The SEC’s move reflects a broader effort to strengthen financial regulation and protect investors, adapting to the evolving complexities of the Philippine financial market.
