MANILA – The Securities and Exchange Commission (SEC) is seeking public comment on a proposed policy that would set limits on interest rates and other charges imposed by lending and financing companies to better protect consumers.

In a press release issued Friday, the SEC said it has released a draft memorandum circular aimed at setting ceilings on interest rates and fees under Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act.

Under the proposal, a 6 percent cap is being considered for unsecured general-purpose loans worth up to ₱20,000 and with repayment terms of up to six months.

The SEC is also proposing a 10 percent per month limit on the effective interest rate, which includes the nominal interest rate and all other applicable charges such as processing, service, notarial, handling, and verification fees. This excludes penalties for late or non-payment.

Additionally, the proposed circular would allow lending and financing companies to charge penalties “of up to 5 percent per month for late payment or non-payment on outstanding scheduled amounts due.”

“The regulation will cover all such loan contracts entered into, restructured, or renewed beginning Dec. 1, 2025, whether online or through traditional and offline distribution channels,” the SEC said.

The proposed regulation follows a similar policy issued in 2022 that capped interest rates for unsecured general-purpose loans not exceeding ₱10,000 and payable within four months.

According to the SEC, the new measure “aims to better reflect current socioeconomic conditions, striking a balance between consumer protection and the competitiveness of duly licensed lending and financing companies.”

SEC Chairperson Francis Lim said the number of borrowers struggling under excessive interest rates has continued to rise as some entities take advantage of online lending platforms to trap citizens in debt.

“Through responsive policies and stronger enforcement actions, the SEC will ensure that lending practices remain fair, transparent, and aligned with consumer protection standards, while promoting the continued viability and competitiveness of legitimate financing and lending companies,” Lim said.