Regulatory Alerts2019-09-15
Inclusion of Contract Registration Company Fees in the Administrative Service Fees, Commissions, and Costs Stipulated in Article 83 of the Implementing Regulation of the Finance Companies Control Law
The Saudi Central Bank mandates that contract registration company fees must be included within the statutory cap of 1% or SAR 5,000 on administrative service fees, commissions, and costs outlined in Article 83 of the Implementing Regulations of the Finance Companies Control Law. This directive explicitly prohibits finance companies from charging clients for these registration fees separately or outside the aforementioned capped limits. The clarification reinforces prior regulatory guidance by categorizing unavoidable financing-related charges, including registration costs, as part of the overall capped administrative expenses.
In the Name of Allah, the Most Gracious, the Most Merciful
Saudi Central Bank Head Office
Office of the Deputy Governor for Supervision
Ref: 3325/99 Date: 1441/01/16 Attachments: None
Circular
Dear Sirs, Peace, mercy, and blessings of God be upon you,
Subject: Inclusion of Contract Registration Company Fees in the Administrative Service Fees, Commissions, and Costs Stipulated in Article 83 of the Implementing Regulation of the Finance Companies Control Law
Based on the authorities granted to the Saudi Central Bank under the relevant systems, regulations, and instructions, including the Finance Companies Control Law issued by Royal Decree No. (M/51) dated 1433/8/13 and its Implementing Regulations issued by the Governor's Decision No. 2/M Sh T dated 1434/4/14, which stipulated in Article 83 that "The fees, commissions, and administrative service costs collected by a finance company from the beneficiary shall not exceed 1% of the financing amount or SAR 5,000 (five thousand riyals), whichever is less", and in continuation of the Bank's Circular No. 91211....361 dated 1436/6/30, which stated that the fees and administrative service costs referred to in the aforementioned Article encompass all amounts the beneficiary is obligated to pay aside from the financing amount and time cost, including all fees, costs, and commissions that the beneficiary cannot avoid in order to obtain financing, including registration fees.
Accordingly, the Bank wishes to confirm that contract registration company fees are included in the administrative service fees, commissions, and costs capped by Article 83 of the Implementing Regulations of the Finance Companies Control Law, and they shall not be charged to the client outside these fees.
Yours sincerely,
(Signature) Fahd bin Ibrahim Al-Shathri Deputy Governor for Supervision
Distribution Scope:
- Banks and commercial banks operating in the Kingdom
- Finance companies operating in the Kingdom
- Saudi Company for Financing Lease Contract Registration
Al-Majaz P.O. Box 2992, Riyadh 11169, Tel: 4662300 - Fax: 4662543