The Securities and Exchange Commission (SEC) is finalizing new rules to impose stricter caps on interest rates and fees charged by lending and financing companies, an effort directed by the Department of Finance (DOF) to protect the public from abusive lending practices, especially those prevalent on online platforms.
The move, which aims to curb “extremely high interest rates” that cause people to “end up in debt,” follows the directive of Finance Secretary Ralph Recto, who said the DOF “will assist the SEC to tighten regulation of these.”
The proposed rules specifically target unsecured general-purpose loans with a maximum amount of P20,000 and loan terms of up to six months.
Under the forthcoming memorandum circular, the ceiling for the maximum nominal interest rate will be set at 6 percent per month (about 0.2 percent per day).
The effective interest rate—which includes all other costs and fees—will be capped at 10 percent per month (around 0.33 percent per day). late payment or nonpayment penalties would be limited to 5 percent per month on the outstanding amount, and the total charges are intended to be limited to the amount borrowed.
The SEC is empowered to set reasonable interest rates and fees by Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act.
SEC Chairman Francis said that 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.”
Noncompliant credit providers face fines ranging from P25,000 to P100,000 for the first and second offenses. Companies could also face heavier penalties, including suspension and revocation of permits.
The SEC is seeking public input on the proposed guidelines, with the deadline for submission set for Nov. 14, 2025.
