Bothered by Pesky Collection Agents? SEC Wants to End “Abusive, Unethical” Means to Collect Debt

Debt collection agencies will be fined for every violation.
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The Securities and Exchange Commission (SEC) is cracking down on lending and financing companies who engage in harassment and unethical practices to collect debts from their clients. The agency said it is taking action following numerous complaints against these companies as well as from third party service providers who employ “abusive, unethical, and unfair means to collect debts.” 

The SEC said that, in some cases, collection agents threaten to disclose the borrower’s debt status on social media or make it appear a formal complaint has been filed against the borrower.

In a draft memorandum issued recently, the SEC laid down strict guidelines identifying unfair collections practices as well as appropriate penalties for lending and financing companies found guilty of violating the rules.

Under the draft memorandum, the following conduct shall constitute unfair collection practices:

  • use of threat or violence and other criminal means to harm the borrower, his/her reputation, or his/her property;
  • use of threats to take any action that cannot legally be taken;
  • use of obscenities, insults, or profane language, which abuse the borrower and/or amount to a criminal act or offense under applicable laws;
  • disclosure or publication of the borrower’s name and other personal information, except in certain cases;
  • communicating or threatening to communicate to any person loan information, which is known or which should be known to be false, including the failure to communicate that the debt is being disputed, except in certain cases;
  • use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower; and
  • making contact at unreasonable/ inconvenient times or hours (defined as contact before 8 a.m. and after 9 p.m., unless the account is past due for more than 60 days or borrower has given express permission that the said times are the only reasonable or convenient opportunities for contact).

The proposed circular provides for penalties ranging from P25,000, in the case of lending companies, and P50,000, for financing companies, to suspension or revocation of certificate of authority to operate as a financing or lending company.


The SEC also issued guidelines to ensure that financing and lending companies keep data on the borrower strictly confidential, except in certain circumstances (such as written consent from the borrower).

“Financing and lending companies have the right to collect amounts due them, but they can exercise such right only through reasonable and legally permissible means,” SEC Chairperson Emilio B. Aquino said. “As the overseer of financing and lending companies, the Commission will take all the necessary steps to tackle abusive, unethical and unfair practices of collecting debt. In parallel, we will intensify our efforts to promote responsible borrowing.”

The SEC is currently accepting inputs and comments on the draft circular until June 5, 2019.

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Paul John Caña
Associate Editor, Esquire Philippines
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