Client Protection Rules

Introduction

SAMA is the authority responsible for monitoring and supervising the financial institutions licensed by it. SAMA has regulatory powers, including framing and regulating the rights of financial institutions' customers, based on the Saudi Central Bank Law issued by Royal Decree No. M/36 dated 11/04/1442H and its amendments as well as Article (4) of the Law which states that "SAMA shall carry out its duties according to the provisions of the Law, the regulations and policies issued by the Board, and in line with international best standards and practices. The Bank shall have all powers necessary to be able to achieve its objectives and carry out its duties. To this end, SAMA may exercise the following duties, powers and responsibilities: (9) developing instructions and procedures that would protect the consumers of financial institutions." This is also based on the Banking Control Law issued by Royal Decree M/5 dated 22/02/1386H and its amendments, granting SAMA the authority to determine the procedures and conditions that banks must follow when dealing with consumers, in addition to the provisions in the Cooperative Insurance Companies Control Law issued Royal Decree No. M/32 dated 02/06/1424H and its amendments regarding SAMA's powers to set the rules and controls that guarantee the rights of beneficiaries. The Finance Companies Control Law issued by Royal Decree No. M/51 dated 13/08/1433H and its amendments and regulations include the necessary rules to protect transactions, ensure their fairness, and protect the rights of consumers. Moreover, the Credit Information Law issued under Royal Decree No. M/37 dated 05/07/1429H and its regulations are aimed at regulating consumer rights in the credit information sector, and one of the goals of the Law of Payments and Payment Services issued by Royal Decree M/26 dated 22/03/1443H is to enhance the protection of the rights of parties dealing with payment systems and payment service providers.

Purpose

To establish the principle of financial consumer protection and keep abreast of the instructions issued internationally, namely the High-Level Principles on Financial Consumer Protection.

To ensure that consumers of financial institutions supervised by SAMA are treated with transparency, honesty and fairness.

To ensure that consumers can easily obtain financial services and products at reasonable costs and with high quality.

Definitions

The following terms and phrases, wherever mentioned in this document, shall have the meanings assigned to them unless the context otherwise requires:

Saudi Arabia: The Kingdom of Saudi Arabia.

SAMA: The Saudi Central Bank.

Financial institution: An entity supervised and regulated by SAMA according to the applicable laws.

Bank: Any natural or juristic person that is basically practicing any of the banking business in Saudi Arabia and is licensed according to the provisions of the Banking Control Law.

Finance company: A joint stock company licensed to engage in finance activities according to the Finance Companies Control Law.

Insurance company: A joint stock company conducting insurance and/or reinsurance activities according to the Insurance Companies Control Law.

Payments institutions: Payment service providers licensed by SAMA according to the Law of Payments and Payment Services.

Remittance service providers: Financial institutions providing remittance services under the license issued by SAMA.

Credit and charge card issuers: Financial institutions licensed to issue credit and charge cards in Saudi Arabia.

Credit bureaus: Companies licensed to collect and maintain credit information on consumers and provide the same to members upon request according to the Credit Information Law.

Credit record: A report issued by a credit bureau containing consumer credit information.

Conflict of interest: A situation in which the objectivity and independence of a financial institution or any of its employees is adversely affected during the performance of tasks in pursuit of its own interests or the interests of any of its employees, in a manner that violates justice, fairness, integrity and responsibility to consumers.

Consumer: A natural person who is a beneficiary of products and services provided by licensed financial institutions.

Complaint: Any expression, written or verbal, entailing dissatisfaction with the provided services, whether such dissatisfaction is justified or not.

Complaint resolution: When a financial institution reaches a final outcome regarding the consumer's complaint by following the measures and procedures necessary to settle the complaint fairly and effectively within the specified time period.

Inquiry: A request for information by the consumer regarding the services or products provided by financial institutions.

Application: A request submitted by the consumer to obtain a product or service offered by the financial institution.

Clearance certificate: An official document issued by a financial institution confirming that there are no outstanding financial obligations on the consumer for a product or service previously obtained.

Employees: Individuals responsible for providing the services and products offered by the financial institution, including those directly employed or contracted through outsourcing.

Error: Any action resulting in a violation of documented operational policies and procedures, leading to financial implications and/or infringement of statutory or regulatory consumer rights.

Outsourcing: An arrangement made with a third party contracted by the financial institution to provide a service on its behalf.

Verified channels: Means of communication that can be authenticated and are capable of being retrieved in written or electronic form.

Day: A calendar day, including weekends and official holidays.

Business day: A calendar day excluding weekends and official holidays.

Third party: An entity assigned to perform an activity on behalf of the financial institution.

These Principles form the general framework for protecting consumers of financial institutions and must be observed by financial institutions in all their dealings with consumers. Such principles are as follows:

Principle 1: Equitable and Fair Treatment

The financial institution must treat consumers equitably, honestly and fairly at all stages of their relationship to the point that it becomes an integral part of the financial institution's culture. Moreover, due care must be exercised and special attention must be given to low-income and less educated people, older people and those with special needs of both sexes.

Principle 2: Disclosure and Transparency

The financial institution must ensure that the information about products and services provided to consumers is clear and comprehensible and that it is updated, clear, concise, accurate, not misleading, and easy to access especially the key terms and features.

Principle 3: Education and Awareness

The financial institution must develop appropriate programs and mechanisms to improve the knowledge and skills of consumers, raise their level of awareness, enable them to understand major risks, and help them to make informed and effective decisions.

Principle 4: Behavior and Work Ethic

The financial institution must work in a highly professional manner for the benefit of consumers during their relationship, where a financial institution is primarily responsible for the protection of the financial interests of the consumer.

Principle 5: Protection Against Fraud and Misuse

The financial institution must protect customers' assets against fraud and put in place technical and control systems that are highly efficient and effective to limit and detect fraud, embezzlement or misuse and take the necessary action if any incident occurs.

Principle 6: Protection of Data and Information Privacy

The financial institution must develop appropriate mechanisms according to the relevant applicable regulations, instructions and policies to protect the privacy of consumers' financial, credit, insurance and/or personal information.

Principle 7: Complaints Handling

The financial institution must have an appropriate mechanism in place for consumers to submit their complaints, and the mechanism must be clear and effective.

Principle 8: Competition

The financial institution must enable consumers to easily search and compare the best services and products and their providers, and provide the best products, services, and prices to meet consumers' needs and desires.

Principle 9: Outsourcing

When outsourcing services that involve dealing with consumers, the financial institution must ensure that outsourced service providers comply with the requirements of these Principles and Rules.

Principle 10: Conflict of Interest

The financial institution must establish a written policy on conflict of interests and ensure the existence and implementation of policies that help in identifying transactions that are likely to be a source of conflict of interest.

Rule 1: The financial institution must encourage consumers to read the contracts and their annexes, the initial disclosure form, the terms and conditions, and any documents that require the consumer's approval or signature.

Rule 2: The financial institution must provide information and/or documents to consumers clearly and accurately, and it must avoid misinformation, fraud and deception.

Rule 3: The financial institution must include all terms and conditions in the product or service application form, drafted in Arabic in a simple, clear and direct language. An English copy must be provided upon the consumer's request.

Rule 4: The financial institution must inform the consumer of any change in the terms and conditions at least 30 days before the change comes into effect.

Rule 5: When concluding the contract or agreement, the financial institution must provide the consumer with an initial disclosure form containing information on products and services, details of calculating fees and commissions, and the term cost (if any).

Rule 6: The financial institution must standardize the font size used (14 as a minimum) and ensure that it is clear and readable in contracts and annexes.

Rule 7: The financial institution must provide the consumer with all documents related to the products or services in paper or electronic format immediately upon obtaining them.

Rule 8: The financial institution must not raise the amount of fees and commissions to be paid by a consumer after obtaining the service or product and signing the contract.

Rule 9: The financial institution must set a list of fees and commissions in a visible place in the head office and branches and publish it on the websites.

Rule 10: When a consumer applies for a service or product, the financial institution must send notifications and updates through documented channels.

Rule 11: The financial institution is responsible for protecting consumer information and maintaining its confidentiality.

Rule 12: The financial institution must ensure that all electronic channels are available and secure.

Rule 13: The financial institution must ensure that its systems and services are continuous and ready to meet the needs of consumers at all times.

Rule 14: The financial institution must ensure that all employees perform their duties efficiently and effectively and follow codes of conduct and ethics with high professionalism.

Rule 15: The financial institution must monitor the performance of front-line employees through periodic and confidential visits.

Rule 16: The financial institution must continue to educate consumers about products and services and their risks, debt handling, fraud, and financial education.

Rule 17: The financial institution must provide multiple channels dedicated to receiving complaints, inquiries and requests.

Rule 18: The financial institution must display the complaint handling mechanism in a visible place in the head office and branches and publish it on the websites.

Rule 19: The mechanism for handling complaints and inquiries must include clear procedures and documentation.

Rule 20: The financial institution must develop performance indicators to measure the handling of directly-filed complaints.

Rule 21: The financial institution must provide, within 5 working days, copies of original forms, updated terms and conditions, contracts, and insurance policies upon request.

Rule 22: The financial institution must provide a toll-free number for consumers to call from inside Saudi Arabia.

Rule 23: The financial institution must take into account humanitarian cases and its social responsibility when dealing with consumers facing emergency financial difficulties.

Rule 24: The financial institution and its personnel must not treat consumers differently in a biased or unfair manner.

Rule 25: The financial institution must publish the Financial Consumer Protection Principles and Rules on its website.

Rule 26: The financial institution must display the branch working hours at the branch's main entrance and on the website.

Rule 1: Fees, commissions and administrative service charges must not exceed 1% of the financing amount or SAR 5,000, whichever is less.

Rule 2: The bank or finance company must take an acknowledgement from the consumer regarding real estate valuation fees.

Rule 3: The bank and the finance company must issue and provide the consumer with a letter of clearance through one of the documented channels immediately after the payment of the debt dues.

Rule 4: The bank or finance company must inform the consumer through documented channels of the consequences on their credit record when a settlement is reached.

Rule 5: The bank or the finance company must provide the consumer, upon their request, with a detailed amortization schedule free of charge.

Rule 6: Banks, payment companies, and credit and charge card issuers must ensure that merchant customers do not impose additional charges on card holders.

Rule 7: Banks, payment companies, and credit and charge card issuers must include in the merchant agreement that no additional fees may be charged for card payments.

Rule 8: Banks, payment companies and credit and charge card issuers must notify consumers immediately of debit or credit transactions in their accounts through SMS.

Rule 9: Banks and payment companies must set maximum limits for transfers, daily withdrawals, POS transactions, online purchases and Sadad transactions.

Rule 10: Banks and credit and charge card issuers must provide a 24/7 toll-free number for reporting lost cards, fraud, and objections.

Rule 11: Banks must provide a new debit card to the consumer free of charge upon request and reissue at least 30 days before expiry.

Rule 12: Banks must verify that all ATMs and POS systems meet consumer needs through periodic maintenance and monitoring.

Rule 13: Banks must properly process claims related to incorrect mada card transactions within two working days.

Rule 14: Credit and charge card issuers must follow specific rules for card issuance, fees, and activation.

These Principles and Rules set the minimum customer due diligence obligations to be met by financial institutions, as they must continuously work on developing their own internal procedures.

SAMA may follow up on the application of these Principles and Rules and take any necessary actions as it deems appropriate against the violations detected.

All provisions of these Principles and Rules shall enter into force from the date of their approval by the authorized person.

These Principles and Rules shall replace the Consumer Protection Principles previously issued by SAMA.

These Principles and Rules shall supersede any provisions to the contrary.