The Securities and Exchange Commission (SEC) is set to implement stricter limits on interest rates and fees charged by lending and financing companies as part of its campaign to curb predatory lending practices and strengthen consumer protection.
In a statement released Friday, the SEC announced that it has opened for public comment a draft memorandum circular issued on October 30, which proposes a new ceiling on interest rates and fees for loans not exceeding ₱20,000 with a repayment term of up to six months.
The proposed regulation will cover all loan contracts that will be entered into, restructured, or renewed beginning December 1, 2025, whether conducted online or through traditional channels.
According to the SEC, the new proposal is in line with Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act, which authorizes the Commission to determine reasonable interest and fee structures for financial service providers.
The SEC first imposed an interest rate cap in 2022, but it only applied to loans up to ₱10,000 payable within four months.
Through the updated measure, the Commission aims to align lending regulations with current economic realities while ensuring that legitimate lending firms remain fair and competitive.
“The number of borrowers struggling under excessive interest rates has continued to grow… Through responsive policies and stronger enforcement actions, the SEC will ensure that lending practices remain fair, transparent, and aligned with consumer protection standards,” said SEC Chairperson Francis Lim.
Under the draft rules, the maximum nominal interest rate will be set at 6% per month or 0.2% per day, while the effective interest rate will be capped at 10% per month or 0.33% per day—inclusive of all fees such as processing, service, notarial, and handling charges.
Late or unpaid loans may only incur a maximum penalty of 5% per month, and a total cost cap of 100% of the principal amount—covering all interest, fees, and penalties—will also be enforced.
Violations will carry monetary penalties: ₱25,000 for the first offense and ₱50,000 for the second for lending companies; and ₱50,000 and ₱100,000, respectively, for financing companies.
On the third offense, the SEC may impose double fines of up to ₱1 million, along with a 60-day suspension or revocation of the firm’s license.
The SEC’s Financing and Lending Companies Department will accept comments on the draft circular until November 14.