Circular to Banks and Financial Institutions No. 2024-02 of January 29, 2024

Tunis, January 29, 2024

CIRCULAR TO BANKS AND FINANCIAL INSTITUTIONS No. 2024-02

Subject: Conditions for the marketing and pricing of financial products and services.

The Governor of the Central Bank of Tunisia,

Having regard to Organic Law No. 2004-63 of July 27, 2004, on the protection of personal data; Having regard to Organic Law No. 2015-26 of August 7, 2015, on the fight against terrorism and the repression of money laundering, as amended and supplemented by Organic Law No. 2019-09 of January 23, 2019; Having regard to Law No. 2000-83 of August 9, 2000, on electronic exchanges and e-commerce; Having regard to Law No. 2005-51 of June 27, 2005, on electronic fund transfers; Having regard to Law No. 2015-36 of September 15, 2015, on the reorganization of competition and prices; Having regard to Law No. 2016-35 of April 25, 2016, establishing the status of the Central Bank of Tunisia, particularly Article 8 thereof; Having regard to Law No. 2016-48 of July 11, 2016, on banks and financial institutions, particularly Articles 82 and 84 thereof; Having regard to Decree-Law No. 2023-17 of March 11, 2023, on cybersecurity; Having regard to Circular No. 87-47 of December 12, 1987, on the procedures for granting, monitoring, and refinancing credits; Having regard to Circular No. 91-22 of December 17, 1991, regulating banking conditions; Having regard to Circular No. 2006-11 of October 18, 2006, on the minimum general and specific conditions for deposit account management agreements; Having regard to Circular No. 2006-12 of October 19, 2006, on the attributes of banking service quality; Having regard to Circular No. 2006-19 of November 28, 2006, on internal control; Having regard to Circular No. 2017-06 of July 31, 2017, on accounting, prudential, and statistical reporting to the Central Bank of Tunisia; Having regard to Circular No. 2017-08 of September 19, 2017, on internal control rules for managing money laundering and terrorism financing risks, as amended and supplemented by subsequent texts; Having regard to Circular No. 2019-08 on the definition of Islamic banking operations and the establishment of procedures and conditions for their conduct; Having regard to Circular No. 2021-05 of August 19, 2021, on the governance framework for banks and financial institutions; Having regard to the opinion of the Compliance Control Committee No. 2024-2 dated January 22, 2024, as provided for in Article 42 of Law No. 2016-35 of April 25, 2016 establishing the status of the Central Bank of Tunisia.

Decides:

TITRE I: GENERAL PROVISIONS

Article 1: This circular sets forth the requirements that banks and financial institutions must comply with before and during the marketing of any financial product or service, as well as the requirements to be observed regarding pricing.

Article 2: For the purposes of this circular, financial products and services are considered to be any commercial offer made to customers by a bank or financial institution within the framework of banking operations provided for in Article 4 of the aforementioned Law No. 2016-48, operations linked thereto, and all other operations carried out by banks and financial institutions in accordance with applicable legislation.

Article 3: This circular applies to banks and financial institutions as defined by Law No. 2016-48, excluding payment institutions.

Domestic mobile payment services remain governed by the provisions of Central Bank of Tunisia Circular No. 2020-11 of May 18, 2020, on the conditions for providing domestic mobile payment services.

TITRE II: PRICING AND MARKETING POLICY FOR FINANCIAL PRODUCTS AND SERVICES AND INTERNAL CONTROL RULES

Article 4: Banks and financial institutions must establish a marketing and pricing policy for financial products and services, approved by the governing body and translated into formalized procedures.

This policy must be consistent with the policy for protecting the interests of banking service users and their personal data, as provided for in Circular No. 2021-05 of August 19, 2021.

The marketing and pricing policy for financial products and services must, in particular:

• ensure sound commercial conduct towards clients;
• ensure fair treatment for all clients while respecting the principle of transparency, without prejudice to their commercial policies;
• address the specific needs of each customer segment;
• establish fair pricing in accordance with the pricing conditions set forth in this circular;
• rely on clear and transparent communication with clients;
• prohibit any conditional or loss-leading sales practices and any act of unfair competition; and
• guarantee the protection of clients' personal data.

Article 5: Banks and financial institutions must establish adequate internal control procedures and rules to continuously monitor and evaluate the marketing process of products and services, as well as the associated risk management, to ensure that products and services meet customer needs and comply with applicable regulatory requirements.

These procedures must be reviewed annually and updated as necessary.

Article 6: Notwithstanding the provisions of Article 4 of this circular, the marketing and pricing policy for financial products and services must include specific internal control rules for products and services marketed via information and communication technology channels, ensuring:

• risk management, particularly cybersecurity, money laundering, terrorism financing, and reputational risks;
• the security of platforms and transactions; and
• the continuity of the provision of the financial product or service.

Article 7: Banks and financial institutions are required to establish a quality framework that enshrines the rules of security, efficiency, and transparency in the execution of their operations.

To this end, they must, in particular:

• establish precise procedures for the various operations;
• work towards the adoption and application of applicable quality standards; and
• implement programs to instill a quality culture among staff and embed it across their various structures.

Article 8: Banks and financial institutions must establish customer information procedures throughout all phases of the marketing of financial products and services. They must, in particular:

• issue an acknowledgment of receipt for all information or advice requests received and ensure a written response;
• send customers, by any means leaving a written record, a monthly statement for deposit and current accounts comprising the minimum disclosures set forth in Annex I to this circular;
• provide any financing beneficiary with an amortization schedule;
• inform customers, in the event of adopting a variable interest rate, of the impacts on principal and interest installments following a market money rate variation of 100 basis points or more. These impacts must be reflected in the amortization schedule;
• provide holders of professional accounts with interest scales calculated quarterly, indicating all elements taken into account for the interest calculation;
• inform customers subscribing to a bundled offer ("Pack") of the different services it comprises; and
• inform customers, by any means leaving a written record, of any decision to discontinue the marketing of a financial product or service at least thirty (30) working days prior to its effective implementation. The information is made available to customers only after the expiration of a fifteen (15) working day period from the date of prior notification to the Central Bank of Tunisia as provided for in Article 19 of this circular.

Notwithstanding the provisions of the dash "d" of Article 2 of Circular No. 2006-11, banks and financial institutions must inform their customers, by any means leaving a written record, of any modification to the characteristics of a financial product or service or to remuneration or pricing levels at least ten (10) days prior to the effective implementation of said modification.

Article 9: Banks and financial institutions are required to:

• set, within a min-max range, the debtor and creditor interest rates for operations freely determined by banks and financial institutions; and
• set, for each applicable commission, a single pricing level.

However, without prejudice to the provisions of Article 13 of this circular, banks and financial institutions may apply commission levels below the set level, in accordance with their commercial policy.

Article 10: Banks and financial institutions must, prior to a customer's subscription to a financial product or service, provide a pre-contractual document summarizing in a simplified manner, in clear terms and legible characters, the characteristics of the financial product or service, its pricing conditions, as well as the resulting benefits and risks. These documents must be updated upon each modification.

Article 11: Banks and financial institutions are required to set maximum deadlines for ruling on financing requests, which may not exceed:

• twenty (20) working days for investment financing requests;
• thirty (30) working days for investment financing requests in a bank syndicate or requiring in-depth evaluation or expertise;
• twenty (20) working days for banks to rule on new working capital financing requests;
• ten (10) working days for banks to rule on working capital financing renewal requests;
• five (5) working days for banks to rule on individual financing requests.

These deadlines are calculated from the date of receipt of all requested documents and information.

The bank or financial institution must communicate to the customer, no later than the expiration of these deadlines and by any means leaving a written record, the outcome of their financing request. Any rejection must be justified.

Banks and financial institutions must display the aforementioned response deadlines by any accessible communication means, including on their websites and via display in branches.

Article 12: Any bank or financial institution must proceed with the release of real and personal guarantees provided by the customer securing a financing, upon full repayment of the financing regardless of the nature of the granted financing.

The bank or financial institution must make the release of the granted guarantee available to the customer within a deadline not exceeding thirty (30) working days from the date of full repayment of the financing by the customer and the settlement, where applicable, of applicable release fees.

TITRE III: TRANSPARENCY AND COMMUNICATION WITH CUSTOMERS

Article 13: Banks and financial institutions must make applicable banking conditions available to their customers by any accessible communication means, including on their websites and via display in branches, to ensure customers receive clear and complete information. Information materials must clearly indicate the applicable base for each commission and commission levels expressed excluding tax.

Article 14: Banks must, under the auspices of their professional association, establish a lexicon of applicable commissions made available to their customers, particularly on their websites. This lexicon indicates the commission codifications applicable by each bank on statements and account extracts, their descriptions, and the description of the operation for which the commission is applied.

Banks are required to send their customers, no later than January 31 of each year, by any means leaving a written record, a summary including all taxes of the commissions and fees charged on their accounts during the preceding year.

Article 15: Banks and financial institutions must ensure that the design, presentation, and content of their promotional materials clearly explain the characteristics of the financial product or service and avoid any practice or information that could mislead the customer.

TITRE IV: INFORMATION TO THE CENTRAL BANK OF TUNISIA

Article 16: Prior to the marketing of any financial product or service, banks and financial institutions must submit to the Central Bank of Tunisia a file comprising at least:

• a detailed descriptive sheet outlining the objective of launching the financial product or service, its main characteristics, its pricing conditions, as well as the target customer profile and the associated procedure note;
• the interest rate, the method of its calculation, and the frequency of collection of any remuneration by the bank or financial institution or by the customer;
• the fees and commissions to be borne by the customer;
• an assessment of the risks associated with the financial product or service and the methods for mitigating them;
• the standard contracts to be signed by the subscriber to the financial product or service;
• partnership and outsourcing agreements related to the financial product or service;
• a report signed by the compliance control officer of the concerned bank or financial institution, attesting that the contractual documents of the financial product or service do not contravene applicable legislation and regulations; and
• the opinion of the Islamic Banking Standards Compliance Control Committee, supported by Sharia arguments for products and services provided by banks and financial institutions conducting Islamic banking operations.

Article 17: For financial products and services marketed via information and communication technology channels, the file must additionally include the documents referred to in Article 16 of this circular, as follows:

• a copy of the security audit report for the platforms, endorsed by a provider certified by the National Cybersecurity Agency;
• a copy of the money laundering or terrorism financing risk assessment report associated with the use of new technologies, in accordance with Article 20 of Circular No. 2017-08 of September 19, 2017, as amended by Circular No. 2018-09 of October 18, 2018; and
• a copy of the business continuity plan.

Article 18: Prior to any modification made to a financial product or service, banks and financial institutions must transmit to the Central Bank of Tunisia a file comprising in particular:

• a sheet describing the proposed modifications, the reasons, and the effects of the modification on the main characteristics of the concerned product or service and its pricing conditions;
• a report signed by the compliance control officer of the concerned bank or financial institution, attesting that the proposed modifications do not contravene applicable legislation and regulations; and
• the opinion of the Islamic Banking Standards Compliance Control Committee, for products and services provided by banks and financial institutions conducting Islamic banking operations.

Article 19: Any decision to discontinue the marketing of a financial product or service must be subject to prior and justified notification to the Central Bank of Tunisia.

Article 20: Prior to the establishment of a new commission, the bank and financial institution must transmit to the Central Bank of Tunisia a file comprising in particular:

• a sheet describing the product or service on which the commission applies, as well as the cost components of the concerned product or service; and
• a note describing the pricing criteria and the underlying reasons for establishing the commission in terms of value added proposed to customers.

Article 21: Prior to modifying the debtor and creditor interest rate levels to be applied or the commission levels on marketed products and services, banks and financial institutions must submit to the Central Bank of Tunisia a file comprising in particular:

• a summary table of current and projected banking conditions;
• a note describing the pricing criteria and the underlying reasons for the pricing revision, particularly in terms of improvement in service provision quality and additional actual costs borne by the bank or financial institution; and
• a sheet specifying the cost components of the concerned product or service.

Article 22: The Central Bank of Tunisia reserves the right to request from banks and financial institutions any document or information it deems necessary concerning financial products and services to be marketed or remuneration or pricing levels.

Article 23: The Central Bank of Tunisia may oppose, by a justified decision, the marketing of new products or services or the establishment of any new commission in accordance with the provisions of Article 84 of Law No. 2016-48 of July 11, 2016.

Article 24: Each bank and financial institution must designate among its personnel a correspondent who acts as the point of contact for the Central Bank of Tunisia to provide, upon request, any information or supplementary details on marketed financial products and services as well as pricing conditions.

TITRE V: MISCELLANEOUS AND TRANSITIONAL PROVISIONS

Article 25: Two new declarations are added to domain 6 regarding general reporting provided for in Annex I to Central Bank of Tunisia Circular No. 2017-06 of July 31, 2017, on accounting, prudential, and statistical reporting to the Central Bank of Tunisia, in accordance with Annex II of this circular.

The content of these declarations must comply with Annexes III and IV to this circular.

Article 26: The provisions of Articles 34 and 37 of Central Bank of Tunisia Circular No. 91-22 of December 17, 1991, on the regulation of banking conditions, are hereby repealed.

Article 27: Central Bank of Tunisia Circular No. 2006-12 of October 19, 2006, on the attributes of banking service quality, is hereby repealed.

Article 28: Banks and financial institutions must:

• comply with the provisions of this circular no later than December 31, 2024;
• submit, within a period not exceeding three (3) months from the date of publication of this circular, a roadmap detailing the actions and measures to be taken to comply; and
• refrain from increasing their banking conditions until December 31, 2024.

The Governor Marouane EL ABASSI

Annex I to Circular No. 2024-02 of January 29, 2024, fixing the minimum disclosures to appear on a bank statement

Bank statements must include the following disclosures:

1. The start and end dates of the period for which the statement is prepared, as well as the initial and final balances;
2. The corporate name of the bank, the address of its registered office, and the name of the branch where the account is opened;
3. Identification details of the account holder(s):
   • Name(s), first name(s), and address, for natural persons;
   • Corporate name and address, for legal entities;
   • Bank Identity Statement (RIB);
   • Account currency.
4. Details of credit or debit transactions as follows:
   • Description, amount, nature of the transaction (credit or debit);
   • Execution date and value date.
5. Liability declaration: a clause stating that the account holder is responsible for reporting any inaccuracies or omissions noted;
6. Contact details of the body responsible for handling complaints as per Circular No. 2022-08 on customer complaint handling policies and measures, as well as those of the banking mediator;
7. A mention regarding the account's eligibility for coverage by the Bank Deposits Guarantee Fund;
8. A