The Securities and Exchange Commission (SEC) has penalized HC Consumer Finance Philippines, Inc. for violating regulatory standards by using unfair and abusive debt collection tactics.
In an order issued by the SEC Financing and Lending Companies Department, the regulator found the firm liable for violating SEC Memorandum Circular (MC) No. 18, Series of 2019, and MC No. 5, Series of 2023, which outline the Rules and Regulations of the Financial Products and Services Consumer Protection Act (FCPA).
An investigation revealed that HC Consumer Finance engaged in unauthorized collection methods, specifically targeting individuals outside of the formal loan agreement. Under current SEC regulations, the commission highlighted two major infractions:
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Unauthorized Third-Party Contact: The company contacted individuals from borrowers’ personal contact lists who were neither designated as guarantors nor co-makers, a direct violation of MC 18 and MC 5.
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Privacy Compromise at Third-Party Residences: The firm utilized third-party residences as venues for debt collection, exposing sensitive financial data to unrelated individuals. “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,” the SEC stated in its official order. “Such exposure is precisely what the FCPA, MC 18, and MC 5 seek to prevent.”
The SEC reiterates its commitment to shielding Filipino consumers from harassment and privacy breaches by lending and financing institutions. Moving forward, the Commission will continue to strictly enforce MC 18 and the FCPA to ensure all financial service providers operate with transparency, fairness, and utmost respect for data privacy.
