The Securities and Exchange Commission (SEC) said Friday it has upheld the revocation of Familyhan Credit Corporation’s license to operate as a lending company due to alleged unfair debt collection practices and failure to disclose the true cost of loans extended to borrowers.
In a statement, the SEC said that the Commission en banc, in a decision dated November 2, 2021, denied the memorandum of appeal filed by Familyhan Credit for lack of merit.
The SEC Corporate Governance and Finance Department (CGFD) issued the revocation order against Familyhan Credit on April 13, 2021 after finding that the company committed three violations of SEC Memorandum Circular No. 18, Series of 2019 (SEC MC18), which prohibits unfair debt collection practices of financing and lending companies.
The corporate regulator has also found Familyhan Credit to have committed eight violations of Republic Act 3765, or the Truth in Lending Act (TILA), in relation to SEC Memorandum Circular No. 7, Series of 2011 (SEC MC 7), which outlines the rules on the implementation of the TILA to enhance loan transaction transparency.
The SEC said Familyhan Credit filed a motion for reconsideration, which the CGFD denied for lack of merit in a resolution dated June 18, 2021.
“[T]he Commission holds that the number of violations that appellant Familyhan committed indicates and affirms the gravity and seriousness thereof because it shows a conscious and deliberate disregard of the provisions of the said circulars, which the Commission is mandated to implement,” the en banc’s decision read.
“This warrants the revocation of its CA and the Commission, thus, sees no compelling reason to disturb the finding and the decision of the CGFD.”
The SEC said Familyhan Credit violated the prohibition on unfair debt collection practices when it contacted persons in the debtor’s contact list other than those named as guarantors or co-makers of the loan agreement.
Likewise, the lending company violated SEC MC 7 when it failed to disclose the net proceeds of the loan to its borrowers.
In its memorandum of appeal, the SEC said Familyhan Credit argued that it complied with the TILA, as the complainants were provided with all required information in their respective loan agreements.
The company also claimed that it did not violate SEC MC 18 when it sent demand letters to persons other than the borrowers, as its purpose was to inquire about the latter’s whereabouts.
The Commission en banc, however, maintained that MC 18 clearly states that the act of “contacting the person in the borrower’s contact list other than those who were named as guarantors or co-makers shall also constitute unfair debt collection practice.”
It also agreed that Familyhan’s loan contracts did not state the net proceeds of the loan to its borrowers, such that they had to manually compute the net proceeds of their respective loan agreements, violating MC 7 in relation to the TILA.
Further, the commissioners noted that Familyhan admitted to having committed the violations when it paid their corresponding penalties.
“The grant of authority to the Commission to revoke the CA of lending or financing companies who violate the law, rules, and regulations is justified by the fact that a license is a mere privilege, and the enjoyment thereof is conditioned on the grantee’s full and continued compliance with applicable laws and regulations,” the en banc said.
GMA News Online is trying to reach out to Familyhan Credit for comment on the matter using the contact details provided on the company’s Facebook page. — VBL, GMA News
SEC upholds revocation of Familyhan Credit s license
Source: News Panda Philippines
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