SEC fines Home Credit P50K for abusive debt collection practices

MANILA — Home Credit was fined P50,000 by the Securities and Exchange Commission (SEC) for engaging in unfair debt collection practices by pursuing collection efforts through individuals who were not named as guarantors or comakers of a loan.

In a statement issued on Wednesday, the SEC said its Financing and Lending Companies Department found the firm liable for violating SEC Memorandum Circular No. 18, series of 2019, and SEC Rules and Regulations implementing the Financial Products and Services Consumer Protection Act (FCPA) of 2022.

Complaint vs Home Credit

The finding stemmed from a complaint filed by a borrower who alleged that Home Credit, or HC Consumer Finance Philippines Inc., used a third-party residence occupied by individuals who were not declared as guarantors or comakers in the loan agreement as a venue for collection activities.

According to the complaint, the company continued the practice despite the borrower’s written objection.

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In its order, the SEC said “the use of a third-party residence as a collection venue necessarily creates a substantial risk that the existence of the debt, the borrower’s financial condition, or the fact of delinquency will become known to persons who have no lawful interest in the transaction.”

“Such exposure is precisely what the FCPA, MC 18, and MC 5 seek to prevent,” it added.

The SEC order states that “[t]he totality of the evidence on record establishes that [HC Consumer Finance], under the pretext of enforcing a valid obligation, transgressed the clear and non-waivable boundaries imposed by law on the manner of debt collection.”

Aside from the issuing Home Credit a fine, the SEC directed the financing and lending firm to review and revise its collection policies and procedures and submit a compliance report to the commission. (Joann Santiago-Villanueva/PNA)

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