Metro Manila (CNN Philippines, October 28) — The Securities and Exchange Commission (SEC) wants to impose a cap on interest rates and other fees charged by payday loan firms, amid piling complaints made by borrowers struggling to pay their dues.

SEC Chairperson Emilio Aquino said on Monday he has written to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno asking him to tap the central bank's power to set the maximum interest rates, fees, and other charges which can be imposed by lending and financing companies. This would require lifting a decades-old rule that gives financing firms a free hand in loan pricing.

The Usury Law empowers the central bank to put a ceiling on interest rates based on "prevailing economic and social conditions." However, the BSP's Monetary Board suspended this in 1982, instead allowing all financial firms to set loan charges, transaction fees, and penalty rates in agreement with a borrower.

"Predatory lending continues to be one of the major subjects of complaints that the Commission receives from the public," Aquino said, adding that some firms charge interest of up to 2.5 percent per day on top of other fees.

The charges pile up the longer it takes a person to pay it back, which effectively plunges borrowers deeper in debt.

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In his request, the SEC chief said countries like Japan, Thailand, and Myanmar enforce interest rate caps, as well as in some areas in the United States.

"Thus, the Commission respectfully requests the BSP to consider putting a ceiling on the interest rates, charges, and other fees that may be imposed by lending companies and financing companies," Aquino added. "The proposed ceiling rates shall not apply to the whole financial sector, but solely to consumer loans and payday loans that are offered by the said companies."

Payday loans offer quick and convenient application procedures with minimal requirements, but charge higher interest compared to bank loans.

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The SEC also had to shut down numerous lending operations amid complaints that these firms resort to public shaming and harassment to collect dues from clients, particularly for online-based lenders who tap into a borrower's contacts list and humiliate them to their friends and colleagues.