HC Consumer Finance fined for abusive debt collection

MANILA, Philippines – The Securities and Exchange Commission (SEC) has imposed a P50,000 fine on HC Consumer Finance Philippines Inc. after finding the lending company liable for unfair debt collection practices.

In an order dated June 3, the SEC’s Financing and Lending Companies Department said HC Consumer Finance violated SEC Memorandum Circular (MC) No. 18, Series of 2019, which prohibits unfair debt collection practices, and MC 5, Series of 2023, which spells out the implementing rules of the Financial Products and Services Consumer Protection Act (FCPA) of 2022.

READ: SEC cracks down on illegal online lending platforms

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The regulator found that the company conducted collection activities at a residence occupied by individuals who were neither guarantors nor comakers of a borrower’s loan obligation.

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According to the SEC, the lender continued its collection efforts at the same address despite receiving a written objection from the borrower.

Under MC 18, contacting persons in a borrower’s contact list other than guarantors or comakers is considered an unfair debt collection practice. The same act is classified as an abusive debt recovery practice under MC 5.

Aside from the monetary penalty, HC Consumer Finance was ordered to stop collecting debts from individuals who are not guarantors or comakers and to cease using third-party residences as collection venues.

The company was likewise directed to review and revise its collection policies and procedures and submit a compliance report to the SEC.

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In its order, the SEC said the use of a third-party residence as a collection venue creates a significant risk that information about a borrower’s debt, financial condition or delinquency may be disclosed to people with no legitimate interest in the transaction.

Such exposure, it said, is precisely what the FCPA and related SEC rules seek to prevent.

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“The totality of the evidence on record establishes that [HC Consumer Finance], under the pretext of enforcing a valid obligation, transgressed the clear and nonwaivable boundaries imposed by law on the manner of debt collection,” the SEC said.

The case originated from a complaint filed by a borrower, underscoring the regulator’s continued efforts to enforce consumer protection rules in the lending industry. INQ

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