Circular Re. The Regulations for Establishing Customer Care Departments in Banks

Saudi Central Bank Saudi Central Bank

Circular

Number: 44069265 Date: 29/08/1444 AH Attachments: -

Dear Sirs, Peace, mercy, and blessings of God be upon you, Subject: Regulations for Establishing Customer Care Departments in Banks.

Based on the Saudi Central Bank System issued by Royal Decree No. (M/36) dated 11/04/1442 AH, and referring to Saudi Central Bank Circular No. (145194000) dated 26/11/1435 AH attached herewith, which updates the regulations for handling and establishing complaint units in banks.

Attached are the Regulations for Establishing Customer Care Departments in Banks, which replace the aforementioned regulations, aiming to define the minimum instructions banks must comply with to achieve due care for customers.

For information and implementation effective from 15/07/2023 AD.

Al-Dhib And please accept my greetings, Al-Nufjan

[Signature] Yazid bin Ahmed Al Sheikh Deputy Governor for Supervision

[Image of Saudi Central Bank Logo]

Distribution Scope: Banks and banks operating in the Kingdom.

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Regulations for Establishing Customer Care Departments in Banks (Second Edition - Sha'ban 1444 AH / March 2023 AD)

Important Note: To follow up on updates and amendments regarding instructions issued by the Saudi Central Bank, the Bank emphasizes the necessity of always relying on the versions published on its electronic website: www.sama.gov.sa

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Contents

Subject	Page Number
Introduction	3
Scope of Application	3
Definitions	4
Part One: Tasks, Policies, and Procedures of the Department	4
Part Two: Department Units and Their Tasks	6
Final Provisions	9

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Introduction:

The Saudi Central Bank is the authority that monitors and supervises licensed banks, and it has regulatory powers including framing and organizing matters related to the rights of customers of those banks and their care, based on the Saudi Central Bank System issued by Royal Decree No. (M/36) dated 11/04/1442 AH and Article (Fourth) thereof, which stipulated "The Bank performs its tasks in accordance with the provisions of the System, and the regulations and policies issued by the Council, and in accordance with the best international standards and practices, and it has all the powers necessary to achieve its goals, and it has - in this regard - the authority to perform the following tasks and powers: ...9. Issuing instructions and procedures ensuring the protection of customers of financial institutions." In addition to the Banking Supervision System issued by Royal Decree No. (M/5) dated 22/02/1386 AH and its amendments, which granted the Saudi Central Bank the authority to determine the conditions and circumstances that a bank must observe when dealing with customers.

Customer care, handling their complaints, and financial education are among the most important principles found in the "HIGH-LEVEL PRINCIPLES ON FINANCIAL CONSUMER PROTECTION", by empowering them to access complaint resolution mechanisms in convenient ways and enhancing their financial education and awareness by the Bank. The Bank should also facilitate customers' access to clear information regarding their protection, rights, and responsibilities. The Bank must also put in place appropriate mechanisms to help customers develop knowledge related to understanding the risks associated with the products offered by the Bank appropriately, enabling them to make suitable choices for their needs.

To achieve the objectives regarding the care of customers of banks operating in the Kingdom, the Saudi Central Bank issues these instructions, which are considered the minimum that banks must comply with to achieve due care for customers.

Scope of Application: These regulations apply to banks operating in the Kingdom and licensed by the Saudi Central Bank.

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Definitions:

Term	Definition
Saudi Central Bank	The Saudi Central Bank.
Bank	Banks and banks licensed to conduct banking business in the Kingdom in accordance with the provisions of the Banking Supervision System.
Department	Customer Care Department.
Customer	A natural or legal person to whom services and products are directed or who has obtained them from the Bank.
Complaint	Any expression of dissatisfaction related to the service provided, whether justified or not, in writing or verbally.
Inquiry	An inquiry from the customer about services or products provided by the Bank.
Request	A request submitted by the customer to obtain a product or service provided by the Bank.
Electronic System	The Bank's electronic system for registering complaints and inquiries.

Part One: Tasks, Policies, and Procedures of the Department

1. Establishment of the Department 1-1 The Department is established by a decision of the Board of Directors and reports administratively directly to the highest executive position in the Bank, whether the Chief Executive Officer, General Manager, or Managing Director. In case of temporary absence of this position; the authority belongs to his deputy, and it must not be administratively linked to any other department in the Bank. 2-1 The Department is granted the authorities and sufficient material, technical, and technical support and human resources to perform its assigned tasks with high efficiency and quality. 3-1 The Department must consist of at least three units (the Bank determines the level of each unit based on its business volume and number of customers), which are the Complaints Processing Unit, the Quality and Performance Analysis Unit, and the Awareness and Financial Education Unit.

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4-1 Without prejudice to the provisions contained in the appointment requirements for executive positions in financial institutions subject to the supervision of the Saudi Central Bank, the Bank must obtain the non-objection of the Saudi Central Bank - in writing - before appointing or assigning the Department Manager.

2. Tasks of the Department 1-2 Protecting bank customers. 2-2 Handling customer complaints with high efficiency and quality. 3-2 Responding to any inquiries that may be received. 4-2 Increasing customer satisfaction when handling complaints. 5-2 Addressing the sources of complaint emergence and reducing them. 6-2 Raising the level of awareness of bank customers about the products and services provided to customers. 7-2 Developing and formulating policies and procedures in accordance with the best local and international practices in the field of customer protection.

3. Policies and Procedures of the Department's Work 1-3 The Department must develop the following policies:

• A policy for analyzing complaints and their specific patterns and dealing with their causes and sources of emergence (Root Cause Analysis) and approving it by the authorized person in the Bank, and measuring its effectiveness in addressing the sources of recurring complaints.
• A policy specific to protecting and caring for bank customers through all stages of their interaction with the Bank (e.g., marketing and sales procedures, after-sales service quality assurance procedures, complaint handling procedures, customer communication procedures, credit advisor service procedures).
• A policy specific to the awareness and financial education of bank customers in line with the products and services provided by the Bank to customers, and the policy must include at least the role of the employee responsible for providing a comprehensive explanation of the product or service, including all obligations arising from that service or product. 2-3 The Department Manager - or his delegate - must have full authority to make an appropriate decision regarding the termination of the handling of a complaint whose amount does not exceed (20,000) riyals, and the Bank must put in place policies and procedures to organize and follow up on this.

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3-3 The Department must develop its working mechanism with relevant departments and update it periodically (at least once every two years), including service level agreements and an escalation mechanism to ensure complaints are handled within statutory periods. This mechanism must be activated technically and used to measure compliance, and it must include escalation to the highest executive level. 4-3 To ensure the efficiency and effectiveness of handling complaints, inquiries, and requests, the Department must include the following definitions in its internal policies for customer protection and comply with them (Complaint, Inquiry, Request, Customer), and they must be in the same context as the definitions contained in these regulations.

4. Department Staff and Their Qualifications 1-4 The Bank must employ the appropriate number of employees in the Department and its units in proportion to the number of customers, products, and services provided by the Bank and the volume of complaints, and a capacity analysis study must be conducted at least once a year. 2-4 The Department Manager and staff must have sufficient knowledge and experience in customer care, including obtaining at least the Professional Certificate in Retail Banking Basics and the Professional Certificate for Credit Advisors. The Bank must continue to qualify them by enrolling them in training programs appropriate to the nature of their work at least once a year. The Bank must also ensure that Department staff are familiar with customer handling skills, the Bank's products and services, and the systems and instructions governing the nature of the relationship between customers and the Bank.

Part Two: Department Units and Their Tasks: First: Complaints Processing Unit:

1. The Unit must provide multiple channels for receiving and handling complaints efficiently and effectively, enabling customers to submit complaints according to their preference easily and conveniently at suitable times. These channels must be published clearly on the Bank's website homepage and its various platforms for the customer. These channels must include at least: the toll-free phone number, the website, mobile applications, email, and branches.
2. The Unit must have technical systems and programs that support documenting and following up on complaint handling procedures with date and time, allowing the status and actions taken regarding them to be known. These systems must - at least - provide the following:

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1-2 Registering complaints and documenting the receipt process, keeping records, and following them up in all stages of handling, providing the customer with a main reference number and the specified handling period via SMS to their phone registered with the Bank. 2-2 The feature for the customer to register their complaint directly in the electronic system, view the final handling result and any updates in detail, and provide the customer with necessary documents (if required). 3-2 Classifying complaints in the electronic system based on the products and services provided by the Bank and in accordance with relevant Saudi Central Bank instructions. 4-2 Enabling customers to automatically evaluate their satisfaction with the results of complaint handling. 5-2 Providing the ability to obtain instant reports and the ability to automatically upload reports to senior management in the Bank to monitor performance. 6-2 Providing the ability for direct automatic linkage to any databases created by the Saudi Central Bank for its supervisory and regulatory purposes. 3. The Unit must handle complaints within a period not exceeding (5) working days from the date of receipt from the customer. 4. The Unit must put in place indicators to measure the performance of complaint handling, and work must be done to follow up on these indicators and achieve the desired goal. The indicators must - at least - include the following:

Indicator Name	Indicator Description	Desired Goal*
Customer Satisfaction Rate with Complaint Handling	Number of complaints rated satisfied/approved by the customer out of the total number of complaints	Not less than 85%
Compliance Rate with Service Level Agreement	Number of complaints the Bank delayed in handling during the statutory period out of the total number of complaints	Not less than 95%

• The Saudi Central Bank will review the percentages of the above indicators and modify them from time to time.

Second: Quality and Performance Analysis Unit:

1. The Unit must review the quality of complaint handling procedures and verify that they are handled with high efficiency and quality in accordance with relevant systems and instructions, and take corrective measures regarding complaints handled incorrectly and put in place procedures to ensure they do not recur.

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2. The Unit must continuously analyze complaint data and provide corrective plans to address the sources of complaint emergence and measure their effectiveness. These reports must be documented and submitted to the Department Manager for submission to the Chief Executive Officer on a monthly basis.
3. The Unit must ensure the accuracy of the reports and data contained therein.
4. The Unit must submit reports to the Department Manager on a quarterly basis for submission to senior management and the Board of Directors of the Bank addressing customer care matters. These reports must - at least - include the following:

• Performance measurement indicators for complaints received in the SAMAH system.
• Performance measurement indicators for complaints received directly by the Bank.
• The extent to which relevant departments comply with the service level agreement.
• Common complaints during the period.
• Challenges facing the Department and the mechanism for addressing them.

Third: Awareness and Financial Education Unit:

1. The Unit must continuously educate customers through all available Bank channels and work to implement annual plans for awareness and financial education, which must include at least: products and services and their risks, fraud, savings, and financial planning.
2. The Unit must continuously educate customers through all complaint reception channels about their right to file complaints and inquiries and the possibility of requesting credit advisory services for customers, in cases where the Bank is not obligated to provide a credit advisor.
3. Staff of the Unit are prohibited from communicating with customers for the purpose of marketing products and services provided by the Bank.
4. The Unit must submit reports to the Department Manager on a semi-annual basis for submission to the Chief Executive Officer, including the following:

• The number of incoming calls to the Unit.
• The type of consultations provided to customers.
• Measuring customer satisfaction with the appropriateness of the consultations provided to them.

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Final Provisions

1- These instructions are considered the minimum that the Bank must do for due care of customers and handling complaints and inquiries with high efficiency and quality, and are closely related to what is contained in the principles and rules for protecting customers of financial institutions. 2- Without prejudice to the provisions contained in the principles of internal audit for banks operating in the Kingdom of Saudi Arabia, as well as the compliance principles for commercial banks and banks operating in the Kingdom of Saudi Arabia; the Department must be subject to review and audit by the Internal Audit Department and the Compliance Department on an annual basis. 3- The Department must obtain the ISO 10002 Customer Complaint Management System certification and renew it annually, in addition to applying the ISO 10004 international standard for measuring and monitoring customer satisfaction. 4- These instructions replace the regulations for establishing complaint units issued pursuant to Saudi Central Bank Circular No. (145194000) dated 26/11/1435 AH. 5- All provisions of these instructions shall apply from the date of 15/07/2023 AD.