The Securities and Exchange Commission (SEC) announced a significant regulatory action to enhance financial consumer protection and foster a more competitive lending environment. The Commission has issued a new circular that tightens the ceilings on interest rates and related fees charged by financing and lending companies for certain types of loans.
The new policy, formalized under SEC Memorandum Circular No. 14, Series of 2025, titled “Recalibrated Ceilings on Interest Rates and Other Fees Charged by Financing Companies and Lending Companies,” takes effect immediately following its issuance on December 10, 2025.
The primary goal of the recalibration is to safeguard financial consumers from excessive and predatory lending practices, ensuring that loan costs remain reasonable and fair. By setting appropriate limits, the SEC also aims to encourage greater transparency and sustainable business models within the financing and lending sectors, ultimately promoting industry competitiveness.
The SEC’s authority to implement this measure is anchored in Section 6(a) of Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act (FCPA). This landmark legislation grants the Commission the explicit power to assess and determine the reasonableness of the interest charges, fees, and other costs demanded, collected, or received by financial service providers for any service or product offered to a financial consumer.
The Circular specifically targets the costs associated with particular loan products, which will now be subject to stricter maximum limits on:
Interest Rates: The core cost of borrowing funds.
Administrative Fees: Charges covering processing, documentation, and other operational expenses.
Other Related Charges: Any additional fees that contribute to the total cost of the loan.
The SEC will provide subsequent guidelines detailing the specific categories of loans covered and the corresponding recalibrated ceilings. The Commission emphasizes that compliance with these new caps is mandatory for all registered financing and lending companies operating in the Philippines.
The SEC’s Market Regulation Department will monitor the immediate implementation and compliance with the Circular. The Commission encourages financial consumers to familiarize themselves with the new ceilings once the detailed guidelines are released and to report any instances of non-compliance.
