COMMENTARY: Advocating debt with dignity

MANILA, Philippines — Talks about the tensions in the Middle East have migrated from our TV screens and newspaper frontpages to the dining table, to the streets, and to workplaces where their effects are already being felt. Ordinary Filipinos whose household budgets have no room for extra costs and families that mainly rely on the income of OFWs bear the brunt from the rising prices of goods, gas and other necessities.

As people look for other sources of funds to absorb these sudden price shocks, credit becomes an important tool to maintain stability. Many seek out online lending platforms that offer app-based credit to support daily expenses.

Tala has 4.5 million customers in the Philippines, and each loan that we grant, we see as more than just a financial transaction. We see it as radical trust in a mother making sure that her family eats three meals a day or a jeepney driver continuing to ply their routes despite high fuel prices so they can keep the lights on at home.

Recognizing that trust is the most valuable asset for digital credit providers, we have centered our operations around this principle. This approach is designed to help our customers move beyond survival, empowering them to uplift their situation, grow and improve their financial health.

Tala has long championed fair collection practices through our “Debt with Dignity” campaign, which is  anchored in the belief that borrowers who are treated with kindness and respect are more likely to honor their obligations and participate actively in the formal economy.

In a recent report by the Atlantic Council’s Geoeconomics Center, our Global Debt Collection with Dignity Initiative was acknowledged as a model framework that governments worldwide can adapt for regulation of collection agencies. This was created to address the inadequate regulation of unfair and abusive tactics by debt collectors that erode trust in the system, while ensuring customer protection at every stage of the lending journey.

At the same time, we believe in debt collection accreditation as the optimal tool to solve the problems of consumers vulnerable to harassment. We laud the renewed push of the Securities and Exchange Commission’s (SEC) to crack down on unfair debt collection practices by studying additional requirements for third party service providers. This complements Senate Bill No. 1744 or the Fair Debt Collection Practices Act that identifies and prohibits specific types of unfair and abusive debt collection practices.

To build a truly equitable financial ecosystem, we must move toward a model of shared transparency across the entire credit cycle. By establishing clear, independent benchmarks for debt collection agencies and law firms, we ensure that every touchpoint in the financial journey is governed by the same principles of dignity and professional integrity.

Every actor within the industry must be held to the same high standard of transparency and consumer protection. We are also taking a stand against those who create fake apps to impersonate legitimate OLPs, as their deceptive tactics damage reputations and restrict access to essential financial services.

Faced with an unstable economic climate, a multi-stakeholder collaboration is required to foster a safe environment for Filipinos to save and/or borrow formally, diverting them from unregulated players that will take advantage of the current situation, of the increased demand for credit to victimize unsuspecting individuals.

About the Author: Moritz Gastl is the General Manager for Tala Philippines. He oversees the fintech firm's local growth and strategy.

Editor’s Note: This branded content for Tala is not covered by Philstar.com's editorial guidelines.