The country’s largest financial technology industry group has backed proposals to place online lending platforms under the Bangko Sentral ng Pilipinas, saying centralized oversight could reduce regulatory gaps and streamline compliance.
The Securities and Exchange Commission had earlier said that it wants to transfer oversight of financing and lending companies to the central bank, while the BSP said the two agencies are studying whether such a move would require legislation or could be done through regulatory issuances.
FinTech Alliance.PH founding chairman Lito Villanueva said the group is backing the discussions between the SEC and BSP on the transfer or sharing of supervisory powers over online lending platforms (OLPs).
He said the fintech sector has been part of ongoing discussions on the future of regulatory framework for OLPs, including SEC’s plan to lift the moratorium on new online lending platform licenses and impose higher capitalization requirements on players seeking to operate lending apps.
He also said consolidating regulatory authority could help limit “regulatory arbitrage” or situations where firms take advantage of overlapping or fragmented oversight by different regulators.
The BSP currently supervises banks and regulates finance companies and non-bank institutions with quasi-banking functions, while the SEC oversees lending and financing companies, including online lenders.
Many of the issues with online lending platforms can be traced to overlapping or fragmented oversight that usually leads to exploitable loopholes and regulatory gaps that allow unsavory practices to fall through the cracks.Since these entities are essentially operating as banks, getting the BSP involved will hopefully benefit the public more.
The discussions between the SEC and BSP to transfer oversight of financing and lending companies to the central bank hopefully leads to improved protections for Filipinos, many of whom are just starting to learn the ropes of the banking system, thanks to increased accessibility afforded by the internet and technology.*
