Philippines SEC Fines HC Consumer Finance for Abusive Debt Collection Practices
The Philippine Securities and Exchange Commission (SEC) has fined HC Consumer Finance Philippines Inc. 50,000 Philippine pesos (approximately $850) after determining the company engaged in abusive debt collection practices that violated the country’s consumer protection and lending regulations.
The order highlights the SEC’s ongoing enforcement efforts against lending companies that fail to comply with debt collection standards established under Philippine law.
SEC Cites Improper Contact With Third Parties
According to the SEC’s Financing and Lending Companies Department, HC Consumer Finance violated SEC Memorandum Circular No. 18, Series of 2019, which prohibits unfair debt collection practices, as well as Memorandum Circular No. 5, Series of 2023, which implements provisions of the Financial Products and Services Consumer Protection Act of 2022.
The regulator found that the company conducted collection activities at a residence occupied by individuals who were neither guarantors nor co-makers on the borrower’s loan. The SEC said the collection efforts continued even after the borrower submitted a written objection.
Under Philippine regulations, contacting individuals connected to a borrower who are not legally responsible for the debt can constitute an unfair debt collection practice. The SEC also classified the conduct as an abusive debt recovery practice under the newer consumer protection framework.
Corrective Measures Ordered
In addition to the monetary penalty, the SEC ordered HC Consumer Finance to:
- Stop collecting debts from individuals who are not guarantors or co-makers
- Cease using third-party residences as collection venues
- Review and revise its collection policies and procedures
- Submit a compliance report to the SEC
The agency said the use of a third-party residence for collection activities creates a substantial risk that information about a borrower’s debt, financial condition, or delinquency status could be disclosed to individuals with no legitimate interest in the account.
Consumer Protection Remains Regulatory Priority
The SEC stated that the conduct at issue crossed legal boundaries governing debt collection activities, despite the existence of a valid debt obligation.
“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 in its order.
The case originated from a borrower complaint and reflects the regulator’s continued focus on enforcing consumer protection standards across the lending and collection industries.
