Saturday, October 24, 2020
Home Legal Advice DearPao Authority between the SEC and BSP over lending companies

Authority between the SEC and BSP over lending companies


Dear PAO,
My sister applied for a loan through an online lending application but was not able to pay one of her monthly payments on time. The lending company threatened her with legal actions and further warned her that they would contact her relatives and friends regarding the unpaid loan. This prompted my sister to call the Bangko Sentral ng Pilipinas (BSP), but it advised my sister to call the Securities and Exchange Commission (SEC) instead. I just want to know which agency has supervision and authority over lending companies.

Dear Koro,
Please be informed of the provisions of Section 11 of Republic Act (RA) 9474, otherwise known as the “Lending Company Regulation Act of 2007,” viz:
“SEC. 11. Delineation of Authority between SEC and the BSP. – Lending companies shall be under the supervision and regulation of the SEC: Provided, however, That lending companies, which are subsidiaries and affiliates of banks and quasi-banks, shall be subject to BSP supervision and examination in accordance with Republic Act No. 7653: Provider further, That the Monetary Board, after being satisfied that there is reasonable ground to believe that a lending company is being used as a conduit by a bank, quasi-bank or their subsidiary/affiliate to circumvent or violate BSP rules and regulations, may order an examination of the lending company’s books and accounts.” (Emphases supplied)
Based on the aforementioned provision of law, lending companies are under the supervision and regulation of the SEC. However, if the lending company is a subsidiary or affiliate of banks and quasi-banks, it is the BSP that has supervision, in which case the BSP may examine such lending company. In your sister’s situation, the BSP referred her to the SEC probably because her lending company is not a subsidiary or affiliate of any bank or quasi-bank.

We hope that we were able to enlighten you on the matter. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.


Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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