Region

Jurisdiction

Regulator

2022-01-01

Circular Letter No. 7 of 2022 on Protecting Clients from Negative Practices in Fund Disbursement

The Financial Regulatory Authority issued Circular Letter No. 7 of 2022 to mandate licensed microfinance and SME financing entities, including affiliated companies, associations, and NGOs, to strictly adhere to customer protection principles and a modified repayment option designed to mitigate default risks. The directive requires these entities to implement the 2016 Client Protection Guideline, particularly focusing on professional and ethical customer interactions and installment facilitation, while ensuring board-level accountability across all service delivery channels. Additionally, it obligates financing entities to educate their staff, promptly report any non-compliance findings to the Authority, and assume full responsibility for enforcement failures.

Egypt

Financial Regulatory Authority Egypt

FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Circular Letter No. 7 of 2022

Dated 29/12/2022

Regarding the Protection of Clients from Negative Practices in Fund Disbursement

In the context of the Financial Regulatory Authority fulfilling its role in regulating supervision over non-banking financial markets and instruments, including the activities of microfinance and small and medium enterprise (SME) financing, considered among the most important tools supporting economic, productive, and service activities. Guided by its supervisory role, commitment to market stability, protection of participants in accordance with Law No. 10 of 2006, safeguarding their rights, providing means and systems, issuing rules ensuring the efficiency of these markets and transparency of activities conducted therein, and taking necessary measures to limit manipulation and fraud in those markets, while emphasizing the protection of participants therein.

Therefore, the Authority emphasizes that all licensed companies, associations, and non-governmental organizations operating concurrently in microfinance and SME financing activities under the Authority's supervision must comply with the implementation of what is stipulated in the Authority's Board of Directors Decision No. (123) of 2016 regarding the "Guideline for Protecting Clients of Companies, Associations/Non-Governmental Organizations Engaged in Microfinance", and specifically regarding customer interaction behaviors as outlined in:

Principle Five "Observing Professional and Ethical Considerations in Customer Interactions",
Principle Six "Facilitating Installment Payments"

The Authority also emphasizes that all entities must comply with Circular Letter No. (6) of 2022 regarding "Considerations for Granting Financing" and applying the modified repayment option to mitigate default risks.

The financing entity must fulfill its role in educating all its employees regarding this, and the Board of Directors, along with the actual manager responsible for financing activities at the financing entity, must take all necessary measures to ensure compliance with applying this Circular Letter across all financing service delivery channels. They must also promptly notify the Authority of any findings that may conflict with its provisions, bearing full responsibility for non-compliance.

Chairman of the Board
Financial Regulatory Authority

Dr. Mohamed Fared Saleh

Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Telephone: +202 37534535
Fax: +202 37470066
WWW.FRA.GOV.EG

ARAB REPUBLIC OF EGYPT
Building Bridges not Walls We Build Bridges, Not Barriers FINANCIAL REGULATORY AUTHORITY