The Securities and Exchange Commission (SEC) has penalized Home Credit Consumer Finance Philippines, Inc. ₱50,000 for employing unfair debt collection practices against a borrower.
The corporate regulator’s decision arose from a complaint alleging that Home Credit agents conducted collection operations at a home occupied by third parties. These individuals had no involvement in the loan and were neither guarantors nor co-makers.
According to the case records, the lending company persisted with its collection attempts at the property despite receiving a formal written objection from the borrower.
In a ruling dated June 3, the SEC’s Financing and Lending Companies Department found Home Credit liable for violating SEC Memorandum Circular No. 18, Series of 2019, which bans unfair debt collection methods.
The company was also found in violation of Memorandum Circular No. 5, Series of 2023, which serves as the implementing rules of the Financial Products and Services Consumer Protection Act (FCPA) of 2022.
Under existing SEC guidelines, contacting people on a borrower’s contact list who are not explicitly co-makers or guarantors is prohibited and classified as an abusive debt recovery method.
“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,” the SEC order stated.
The regulatory body emphasized that financial institutions must remain within legal boundaries when attempting to recover unpaid balances.
“The 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,” it added.
In addition to the ₱50,000 fine for its first offense, the SEC ordered Home Credit to immediately halt all collection efforts targeted at individuals who are not guarantors or co-makers of loans.
Furthermore, the commission instructed the consumer finance firm to review and update its existing debt collection policies to ensure legal compliance and to submit a formal report detailing these changes.