The Securities and Exchange Commission (SEC) of the Philippines has stripped Robocash Finance Corp.’s authority to operate as a financing company for running several branches without the necessary license.
According to the SEC, the Corporate Governance and Finance Department (CGFD) issued the order of revocation on December 12, 2019, after establishing that Robocash Finance violated the “Implementing Rules and Regulations of Republic Act No. 8556, or the Financing Company Act of 1998 (FCA IRR).”
Additionally, the CGFD found that Robocash Finance operated several branches without the requisite Certificate of Authority (CA).
The SEC said that Robocash Finance admitted to establishing and operating branches without the necessary CA. Robocash Finance argued that it did not maliciously violate the regulations by opening up the branches.
The CGFD found no merit in the company’s defense, stating:
“It may be well to note that Respondent was able to secure thirty-two (32) CAs for thirty-two (32) separate branches. Thus, it is even more appalling that despite being aware of the requirement of the law, Respondent knowingly and willingly committed repeated violations thereof.”
Under the rules, the SEC may suspend or revoke an erring financing company’s CA after proper notice and hearing. The Commission may also impose a basic fine of not less than P 10,000.00 plus P100.00 for each day of an ongoing violation
The CGFD initially imposed monetary penalties against Robocash Finance for violation. The SEC stated:
“And, while it is true that the Commission may impose penalties other than revocation of CA, considering the number of times the Respondent knowingly and willingly committed the same violation, the Department is constrained to rule, as it is hereby ruled, that the revocation of Respondent’s CA is warranted under the circumstances. As a final note, while the Respondent’s goal of catering to the needs of the underserved is laudable, it must always be remembered that compliance with the provisions of the law is foremost. The Department will not hesitate to impose the appropriate penalties in cases of violation, even the extreme penalty of revocation of the Certificate of Authority.”
Following the announcement by the Philippines SEC, Robocash issued a statement claiming that according to the laws of the Philippines the Order has not come into force yet and “Robocash Finance Corp. is still validly and legally operating in the market.” Regardless, the company has decided to suspend investment into the loans of Robocash Finance Corp.
Robocash said it is “ready to work and cooperate with the SEC to ensure full compliance with rules and regulations.”
The company also expressed its opinion that the issued Order is too excessive and imposed penalty is too extreme.
Robocash said it will appeal the Order by submitting a motion for reconsideration to the SEC and will take other steps to appeal the order and fully restore the license to operate as a financing company.
Robocash emphasized that regarding existing loans that all commitments on the platform will be fulfilled.
At the same time, Robocash Group also said that its stake in the joint venture Robocash Finance Corp. has been bought out by existing shareholders of the Company as of November 2, 2019, and hence Robocash Group does not control the operations of the Company impacted by the Philippino SEC.
To quote the company:
“While Robocash Finance Corp. remains fully operational with existing products the decision of Robocash Group to exit from the joint venture was based on the group’s long-term objective to improve and develop its own way and build new products in the market with a wider product line including PDL and installment loans. The group has agreed to service Robocash Finance Corp. until the end of the year under the brand name Robocash and give an opportunity to the lender and investors to complete all operations with its loans.”
The Philippine SEC has revoked the primary registration of 2,081 lending and financing companies without the necessary CA, in an ongoing crackdown on illegal lending and financing activities.
The SEC also issued cease and desist orders against 48 online lending applications for operating without incorporating and securing CA.