NPC Imposes Stricter Guidelines on Data Processing by Lending Firms

The National Privacy Commission (NPC) has modified some of its provisions of Circular No. 2020-01, which gives stricter guidelines in the processing of personal data for loan-related transactions by lending firms and protecting guarantors and references in applications of loans.

The amended NPC Circular No. 2022-02 which was released last December 2, 2021, tackles the personal data processing for assessing loan applications, loan collection, loan approvals, character references, closure of loan accounts, and a new provision for guarantors.

Privacy Commissioner John Henry D. Naga has mentioned that the modified circular covers data privacy concerns, especially with the popularity of online lending.

Commissioner Naga states that “NPC Circular No. 2022–02 provides amendments that will serve as an added protection to both borrowers and lending companies. The NPC aims for smooth transactions between the two parties, where borrowers are afforded their data privacy rights and lending companies are given the opportunity to ethically conduct their business and establish trust among their customers,”

The new guidelines regarding personal data processing under Section 3(A)(5) of the modified circular state that a financing company, lending company, and other persons acting as thru should provide just-in-time notices before getting hold of the consent of data subjects in transactions relating to loans. The notices would give data subjects information about how the information to be provided by them will be processed.

For loan processing activities, Section 3(D) of the modified circular states that a lending company, financing company, or other persons acting as thus are barred from unnecessary processing and permissions which include sensitive and personal information.

Source: Manila Bulletin