THE Securities and Exchange Commission (SEC) has denied the appeal of Familyhan Credit Corp. to overturn the former’s decision to revoke its certificate of authority to operate as a lending firm.
In a statement on Friday, the SEC said Familyhan’s Memorandum of Appeal was denied due to its lack of merit based on the Commission en banc’s decision dated Nov. 2, 2021.
“[T]he Commission holds that the number of violations that Appellant Familyhan committed indicates and affirms the gravity and seriousness thereof because it shows a conscious and deliberate disregard of the provisions of the said circulars, which the Commission is mandated to implement,” the Commission en banc was quoted saying.
The SEC Corporate Governance and Finance Department (CGFD) issued the revocation order in April last year after Familyhan was found violating three rules under the SEC Memorandum Circular (MC) No. 18, Series of 2019. The memorandum covers rules on the prohibition of unfair debt collection practices of financing and lending firms.
Familyhan also committed eight violations of Republic Act No. 3765 or the Truth in Lending Act (TILA) implemented by SEC MC No. 7, series of 2011.
“Familyhan filed a motion for reconsideration of the said order, which the CGFD denied for lack of merit in a resolution dated June 18, 2021,” the SEC said.
The SEC CGFD said Familyhan violated rules on unfair debt collection practices when it reached out to the other people on their debtor’s contact list aside from those named as guarantors or co-makers of the loan agreement. It also violated MC 7 when it did not disclose net proceeds of the loan to its borrowers.
However, Familyhan said it complied with the TILA because they provided sufficient information to their borrowers. It also said it did not violate MC 18 when it sent demand letters to the other people in their borrower’s contact list “as its purpose was to inquire about the latter’s whereabouts.”
The commission said under MC 18, “contacting the person in the borrower’s contact list other than those who were named as guarantors or co-makers shall also constitute unfair debt collection practice.” It also maintained that Familyhan’s loan contracts also did not provide enough information for its borrowers.
“The Commission En Banc noted that Familyhan admitted to having committed the aforementioned violations when it paid their corresponding penalties,” the SEC said. — Keren Concepcion G. Valmonte