Central Bank of Jordan Financial Consumer Protection Instructions for the Banking Sector No. (14/2024)

CENTRAL BANK OF JORDAN

Ref No: 10592 / 1 / 27 Date: 23 / 3 / 1446 AH Corresponding to: 26 / 9 / 2024 AD

Financial Consumer Protection Instructions for the Banking Sector No. (14 / 2024)

Issued in reliance on the provisions of Articles (4/b), (43/b), and (65/b) of the Central Bank of Jordan Law No. (23) of 1971 and its amendments, and the provisions of Articles (44) and (99/b) of the Banks Law No. (28) of 2000 and its amendments.

Article (1): These Instructions shall be known as the "Financial Consumer Protection Instructions for the Banking Sector," and their provisions shall apply to all banks operating in the Kingdom after (90) days from the date of their publication in the Official Gazette.

Article (2): Definitions: a- The words and expressions contained in these Instructions shall have the meanings assigned to them in Article (2) of the prevailing Banks Law, unless the context indicates otherwise. b- The following words and expressions shall, wherever they appear in these Instructions, have the meanings assigned to them below, unless the context indicates otherwise:

• Customer: A natural or legal person who has obtained or used any banking services or will obtain them.
• Retail Portfolio: Any banking service provided by the bank to an individual or a group of related customers.
• Credit Card: A card that authorizes the customer to withdraw an amount or purchase a good or service without having a balance in their account, whether the customer is required to pay the full utilized balance by the due date or pay a portion of this balance as determined in the contract, such that interest/return is calculated on the unpaid balance.
• Costs: Include commissions and/or expenses and/or fees and/or any other amounts charged by the bank, excluding interest/return that the customer is required to pay pursuant to the contract.
• Effective Annual Percentage Rate (Effective APR): A percentage representing the actual annual cost of credit over the life of the credit, which includes nominal interest and all costs specified in the contract, excluding commissions and fees payable by the customer resulting from their breach of contractual obligations. It is calculated on the assumption that the credit grant agreement will remain valid for the agreed period and that the bank and customer will perform their obligations under the agreed terms and conditions, according to the calculation equation explained in Annex No. (1).
• Regular Income: The customer's net monthly salary, defined and fixed for (3) consecutive months, plus allowances or bonuses paid to the customer periodically.
• Commitments Declaration: A form containing all credit and financial obligations incumbent on the customer from any source, which require the customer to pay an installment, including obligations arising from the customer acting as a guarantor.
• Debt Burden Ratio (DBR): (The sum of amounts deducted from the customer's or guarantor's regular income for all facilities granted to them as per the credit report and intended to be granted by the bank + the total amount of other commitments stated in the Commitments Declaration) to (the customer's or guarantor's regular income).
• Over-Indebtedness Ratio: (The sum of amounts deducted from the customer's or guarantor's regular income for all facilities granted to them as per the credit report and intended to be granted by the bank + the total amount of other commitments stated in the Commitments Declaration + basic monthly expenses declared by the customer such as (housing, education, bills... etc.)) to (the customer's or guarantor's regular income).

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Chapter One: Financial Consumer Protection Principles for the Retail Portfolio

In pursuit of establishing a comprehensive framework for financial consumer protection which contributes to achieving sustainable development, financial system stability, and enhancing financial inclusion, these Instructions have been formulated to ensure the realization of financial consumer protection principles as follows:

First: Principle of Fair Treatment of Customers

Article (3): The bank shall treat all customers fairly at all stages of the relationship with them, such that this becomes an integral part of the bank's culture. Due care must be exercised, especially for low-income, low-education, elderly customers, and persons with disabilities. The bank is prohibited from discriminating among its customers on the basis of gender, religion, race, or any other reason.

Article (4): The bank shall establish approved internal procedures clarifying the mechanism for debt collection and customer inquiries, and defining the controls regulating this process in accordance with prevailing legislation.

Article (5): The bank is prohibited from obtaining repeated credit documentation from the customer or guarantor for the same credit. An example of this is the customer signing the credit contract in addition to signing promissory notes and/or checks for the same credit.

Article (6): The bank shall provide the guarantor or any of their heirs with a statement showing the amounts the guarantor has paid on behalf of the customer, if requested by the guarantor or one of their heirs, in accordance with proper procedures.

Article (7): In the event of the customer's delay in payment, the bank must comply with the following: a. Notify the customer and guarantor using approved and agreed-upon means and send a short message service (SMS) notification within a maximum period of (15) days from the installment due date, clarifying the actions the bank will take in case of continued delay. The bank must retain copies of these notifications for a period of at least (5) years from the date of sending, or according to retention periods stipulated in relevant legislation, whichever is longer. b. Refrain from the following practices:

1. Writing on any parcel or postal letter sent to the customer or guarantor that implies the matter concerns a debt.
2. Any contact with any person for the purpose of inquiring about the customer or guarantor, unless there is a written authorization from the customer or guarantor specifically for this purpose.
3. Providing the customer and/or guarantor with incorrect information regarding the consequences of default.

Article (8): If the customer and/or guarantor settles/pays off the debt, the bank must immediately cease legal proceedings taken against the customer and/or guarantor in accordance with proper procedures, including the withdrawal of the request.

Article (9): If the salary is the source of repayment for granted credit facilities, the bank must consider the salary receipt date when determining the installment due date and take necessary technical measures to deduct installments on the agreed date with the customer pursuant to the signed contract.

Article (10): If the bank determines that an error in its entries on any customer's account resulted in a gain for the bank, the bank must immediately adjust the relevant entries to implement the required corrections (correcting that error and all resulting interest and/or commission calculations) on that customer's account and all other customers' accounts where the same error occurred, without waiting for a claim from them.

Article (11): The bank shall refund the value of interest/returns received (in advance) and not due on customer loans and advances for early repayment, from the date of early repayment until the original repayment date of the loan. It is not a condition to require the customer to notify the bank of their intention to repay early before doing so. Islamic banks must establish a mechanism to achieve this in accordance with Islamic Sharia provisions for all customers without prejudice to their rights.

Article (12): The bank shall consider requests for relief submitted by customers and/or guarantors and study the possibility of granting them or reaching a decision agreed upon by both parties.

Article (13): If the customer requests transferring credit facilities from one bank to another, both banks must appoint a liaison officer to coordinate between them to achieve the customer's interest. Islamic banks must establish a mechanism to achieve this in accordance with Islamic Sharia provisions.

Second: Principle of Disclosure and Transparency

Article (14): The bank shall adopt disclosure practices concerning banking services and include in its code of conduct/professional ethics a clause clarifying the necessity for the employee to explain the basic terms and conditions related to the service upon the customer's request.

Article (15): If the bank grants customers preferential interest/return rates for the first year/years of the loan/financing life, the bank must disclose to the customer that this rate applies for a specific period by including it in the product advertisement (if any), in the contract, and in the credit offer, and obtaining the customer's signature next to it in the contract.

Article (16): The bank must clarify to the customer the difference between discounted credit (where the full interest/return is collected in advance) and other types of credit.

Article (17): After signing a contract for any service with the customer and guarantor, the bank shall provide them with an original copy of the contract, an installment repayment schedule, and any forms and declarations signed, whether at grant, renewal, rescheduling, or upon making any modification. These copies shall be exempt from commissions, and the bank must obtain the signature of the customer and guarantor acknowledging receipt.

Article (18): The bank shall provide its customers or any legal heirs (upon request) with copies of signed contracts and any notifications, data, or statements related to their accounts with it, even if there is a pending judicial dispute between the bank and the customer or their heirs.

Article (19): The bank shall publish a list of interest rates and commissions for all banking services within branches and on the bank's website homepage. Upon any modification, the bank must provide the Central Bank with the electronic link to this list.

Article (20): Subject to the provisions of prevailing legislation regarding interest calculation on deposits, the bank must comply with the following: a. Determine the interest rate paid on deposits according to the amount and term, and announce it clearly in a prominent place at the bank's headquarters, branches, and website homepage. b. Adhere to the announced interest rate according to the deposit term as a minimum upon its maturity date. c. Notify customers through available and agreed-upon means about the deposit renewal date each time, at least (5) working days before the maturity date, including an electronic link to the interest rates applied to deposits at that time.

Article (21): The bank shall include all terms and conditions for all banking services provided to its customers in detail on its website in an easily accessible manner.

Article (22): All forms and contracts approved by the bank must be written in clear, understandable Modern Standard Arabic, printed in clear and legible font with a size not less than (12). The text must be clear and not subject to more than one interpretation or construction. A version in English must be provided for those who request it.

Article (23): The bank shall allocate a separate contract for each banking service, containing only the terms and conditions specific to that service.

Article (24): The bank shall ensure that all approved contracts and account opening forms include the following information as a minimum: a. The detailed address of the customer and guarantor, contact methods, and their signatures acknowledging the accuracy of the information and their commitment to inform the bank of any modifications. b. Interest/return rates, costs borne by the customer arising from the contractual relationship, and the basis for their calculation. c. Procedures to be taken in case of the customer's breach of the terms in the contract/account opening form, for example, costs that may be incurred by the customer. d. Terms and conditions for mandatory ancillary services accompanying the product (if any). e. The bank may not terminate the contractual relationship except in case of the customer's breach of a contractual obligation and after notifying them via approved and agreed-upon means, including sending an SMS. f. Notwithstanding the provisions of clause (e) of this article, the contract/account opening form may include a termination clause without resorting to the court in either of the following two cases:

• The bank discovers that the customer is listed on any prohibited dealing lists.
• The bank determines that any of the documents submitted to obtain the credit or in guarantees and commitments provided are incorrect. g. Reference to the existence of an independent unit in the bank to handle customer complaints, and specifying contact means. h. A paragraph in large, distinct font stating that both the customer and guarantor acknowledge reading and understanding all terms of the contract/account opening form, and that the customer and guarantor sign next to it to confirm this.

Article (25): The bank is prohibited from including any of the following in its approved contracts and account opening forms: a. Text/stipulations stating the bank's right to modify any terms of the contract/account opening form by its sole discretion. b. Blanks or incomplete/insufficient information, and authorizing the customer and/or guarantor to fill them in and pre-approve their accuracy and waive the right to object to them. c. Terms and expressions bearing the nature of commissions under other names without specifying their nature or definition. d. Unclear text/stipulations that may be subject to more than one interpretation or construction, with the customer signing a waiver of their right to object to them. e. Text/stipulations stating the customer's and/or guarantor's waiver of the bank's sending of notifications or alerts arising from the contractual relationship, or of any of their rights therein, for example, banking secrecy or the right to appeal the bank's procedures or resort to the judiciary.

Article (26): The provisions of Article (25/a) are exempted if the services provided to the customer under the contract are subject to a condition or conditions imposed by a third party, provided that the customer and guarantor are notified of the new conditions within (7) working days via the communication means approved by the bank for the customer and guarantor and by sending them an SMS.

Credit Contracts:

Article (27): The bank must disclose to the guarantor before signing the credit contract the financial and legal consequences incumbent upon them in case of the customer's default, and obtain their signature acknowledging their awareness and understanding of this.

Article (28): The bank shall provide the customer and guarantor with a Fact Sheet containing key product information before signing the credit contract, which must include at least the data contained in Annex No. (2).

Article (29): Before signing the credit contract with the customer, the bank shall provide them with a copy of the credit contract before signing and display the credit offer properly, disclosing the credit amount, duration, total value (principal, interest/return, and costs) the customer will pay during the credit period, and the Effective Annual Percentage Rate (Effective APR). The bank must specify the validity period of this offer and give the customer sufficient time to read and review all contract terms and the credit offer.

Article (30): The bank must comply with the following provisions and include them in the credit contract to express what is stated therein, at a minimum: a. Type of credit. b. Credit amount in numbers and words. c. Credit duration. d. Nominal Interest Rate, specifying whether it is fixed or variable, and defining the variable and fixed parts (margin), with a commitment not to increase the margin under any circumstances during the contract period. e. Number of installments, installment value, and the due date for the first and monthly installments. f. Specification of the periodic date for adjusting the variable interest/return rate. g. Effective Annual Percentage Rate (Effective APR) and any costs not included in the calculation of the Effective Annual Percentage Rate. h. Terms and mechanism for early repayment of the credit or any part of it. i. A paragraph in large, distinct font stating that any modification to the variable interest/return rate will lead to a modification in installments in terms of value or number or both, and that the customer and guarantor will be notified at the address approved by the bank and via SMS, and that the customer and guarantor sign next to it to confirm reading and approval. j. Cases in which the bank has the right to request new guarantees and the consequences of not fulfilling the request. k. The bank has the right to set off the balance/credits of all the customer's and/or guarantor's accounts with it against the value of due installments in case this value is not available or the balance in the main account linked to the granted credit is insufficient, provided the customer and guarantor sign next to it to confirm reading and approval. l. Consequences for the customer and/or guarantor in case of breach of contractual obligations to the bank, including for example:

1. Modification of any resulting costs.
2. Execution on any guarantees provided by the customer and/or guarantor to secure the debt, whether real estate or other guarantees.
3. Credit information of the customer and/or guarantor that will be disclosed to credit reporting agencies licensed by the Central Bank and in accordance with prevailing legislation. m. The customer's right to terminate the credit contract before utilizing any part of the granted amount within (5) working days from the date of signing the contract, provided the customer bears all costs associated with the credit contract (commissions or fees), without incurring any interest or early repayment commission. n. A clause clarifying whether the granted credit is covered by insurance, explaining the costs and other consequences for the customer, and obtaining the customer's signature next to this clause in the credit contract.

Article (31): The bank is prohibited from including the following in credit contracts: a. Any terms contradicting those in the credit offer presented to the customer, or essential terms not stated in the offer, or reference to other documents containing text constituting an obligation on the customer. b. Text/stipulations stating the customer's and guarantor's agreement that sending a notification to either is considered sent to both and that they have received its content, or that a notification to one guarantor is considered a notification to all guarantors. c. Text/stipulations stating that the customer's address is considered the chosen address for the guarantor for notification or communication purposes. d. Text/stipulations stating the guarantor's agreement to the bank increasing the loan balance in agreement with the customer without notifying the guarantor, the guarantor's commitment to repay all resulting obligations, and their waiver of the right to object to this.

Article (32): The bank must provide the customer with a detailed schedule showing installments broken down (principal, interest, and costs), due dates, and grace period (if any).

Article (33): If the credit granted to the customer includes a variable interest rate, the bank must notify the customer immediately upon adjusting the interest rate through approved and agreed-upon means and by sending an SMS. The notification must include the new and old interest rates, the installment value before and after adjustment, and/or the effect on the number of installments, and provide the customer with a new repayment schedule upon request.

Deposit Contracts / Account Opening Forms:

Article (34): The bank is prohibited from reducing the interest rate on a fixed-term deposit before its maturity date stated in the contract.

Article (35): The bank shall include in deposit contracts/account opening forms signed with customers, in distinct font, clauses clarifying any special provisions related to the nature of the account in accordance with prevailing legislation, including but not limited to: a. Consequences of returning checks without sufficient funds in current accounts. b. Terms of breaking the deposit and its consequences on fixed-term deposits. c. Procedures for deposit renewal and the interest rate to be applied at that time. d. Procedures related to joint accounts. e. Procedures for managing accounts of minor customers in accordance with prevailing legislation. f. Clarification of periods and procedures for freezing accounts and their consequences. g. Procedures related to zero-balance accounts (accounts with a zero balance).

Article (36): The bank shall continue to calculate interest on the deposit as stated in the contract signed with the customer, despite the issuance of a precautionary attachment order by a competent authority and/or the death of the customer, unless a contrary decision is issued by the competent authority.

Electronic Banking Services and Third-Party Related Services:

Article (37): The bank must disclose to the customer before providing electronic banking services or services related to third-party business, in proportion to the service provided: a. All costs related to the provided service. b. Risks associated with electronic banking services, whether arising from customer misuse or hacking, and providing advice to enhance the safe use of these services. c. Cases where the responsibility for losses resulting from risks related to electronic services falls on the customer. d. Contact information that the customer can use to report loss or theft of their personal information or object to any transaction on their account or for other inquiries, and the deadline within which the customer can submit the report or objection.

Article (38): The bank must notify customers of any changes or updates to systems that affect them and the terms related to electronic banking services through all approved means for this purpose.

Article (39): The bank must include in the One-Time Password (OTP) message the amount to be debited from the customer's account and warn them against sharing this message with others.

Third: Principle of Protecting Customer Data, Information, and Privacy

Article (40): Subject to legislation related to the protection of personal data and privacy, the bank must comply with at least the following: a. Include in contracts/account opening forms a clause stating that data and information obtained from the customer and/or guarantor within the framework of the contractual relationship are subject to the banking secrecy provisions stipulated in the prevailing Banks Law. b. Prepare approved and clear internal procedures to ensure the protection of customer data and information and maintain their confidentiality and privacy, ensuring a policy of segregation of duties and dual control. c. Employees must sign forms confirming their commitment to maintaining the confidentiality of customer data and information, not to misuse or disclose such data and information during their employment with the bank and upon leaving employment. d. Provide a secure and confidential information technology environment for all information and data available to the bank about its customers and transactions and in all its banking channels to ensure the confidentiality of customer data during any banking operations. The bank must continuously test this environment and ensure its validity. e. Include in the code of conduct/professional rules for employees ethical behaviors regarding the protection and confidentiality of data, and the procedures and legal consequences of using or stealing customer data or disclosing it to a third party without customer consent. f. Data collected about the customer must be documented, correct, and accurate, and updated in accordance with prevailing legislation. g. Upon receiving inquiries from the customer, the bank must not disclose any information related to them or their accounts until verifying their personal identity through various and proper verification means. h. Bear full responsibility for compensating any damage that may befall the customer resulting from a defect and/or breach of its systems or fraud cases occurring without negligence or fault on the part of the customer. i. Provide awareness programs for employees regarding data privacy, maintaining confidentiality, accuracy, and the security of customers' personal and financial data. j. Educate and guide customers regarding their duties and commitments to prevent their accounts from being exposed to any risks, and educate them on methods to protect their accounts and maintain the confidentiality of their information.

Fourth: Principle of Responsible Pricing

Article (41): The bank must prepare approved internal procedures for pricing products and approve them in accordance with proper procedures.

Article (42): The bank is prohibited from modifying any terms of costs related to credit facilities during the contract period with the customer, except those imposed by a third party, subject to compliance with the provisions of Article (26) of these Instructions.

Article (43): The bank's credit policy must include a statement giving the customer the right to choose whether the interest rate on the intended credit is fixed or variable (if a product with both interest options is available).

Article (44): If the customer chooses a credit product with a fixed interest rate, the bank is not allowed to change the interest rate during the contract period by its sole discretion.

Article (45): If the customer chooses a credit product with a fixed interest rate under a contract that authorizes the bank to modify the interest rate after a certain period of the contract, the provisions of paragraph (a) of Article (46) below shall apply to the period during which the bank is allowed to change the interest rate.

Article (46): a. If the customer chooses a credit product with a variable interest rate, the bank must link the interest rate to the pricing tool approved by the Central Bank for this purpose. b. The Central Bank shall determine the pricing tool referred to in clause (a) above according to its discretion by issuing special orders, and banks must take all measures to comply with the requirements of these orders. c. Banks are not allowed to set a minimum limit for the reference interest rate.

Article (47): The bank must transparently disclose the Effective Annual Percentage Rate (Effective APR) to customers through the credit offer and the contract signed with the customer.

Article (48): When the customer delays payment, and if the signed contract includes a provision stating the bank's right to collect late payment interest for this, it must not exceed (1%) annually over the interest rate applied at that time on the value of each installment(s) the customer delays paying on the agreed due date. The bank must include this clearly in the contract signed with the customer.

Article (49): The maximum limits for commissions that the bank can collect for banking services in local and foreign currencies are as stated in Annex No. (3). The bank is prohibited from imposing any commission not mentioned in this annex.

Article (50): Without prejudice to the provisions of Article (49) above, banks are left to determine the commission rates related to credit and prepaid cards, safe deposit box fees, postage fees, savings products, bill payment services, checkbook issuance fees, deposit and withdrawal commission for collection checks, commissions imposed by third parties, commissions related to indirect facilities, and property valuation.

Article (51): The bank is prohibited from accumulating and accruing commissions on the customer's credit account for more than three months.

Article (52): a. If there is a need for any modification/addition to the commissions referred to in Article (49) above, banks shall, through the Banks Association, compile all requests and proposals for modification with the justification for doing so, and provide the Central Bank with a summary thereof by the end of the first month of each year. b. The Central Bank of Jordan shall review the submitted requests and proposals and inform the Banks Association of the decision taken regarding them, and publish in the Official Gazette if any are approved.

Fifth: Principle of Appropriate Design and Presentation of Banking Services

Article (53): The bank shall establish approved work procedures to identify target customers and ensure they include the following: a. Design and develop services suitable for the targeted customer segment and limit risks that may befall them and the bank, and evaluate the suitability of service terms and prices to their needs and requirements. b. Continuous evaluation and development of the service taking into account market developments, customer feedback, and behavior.

Sixth: Principle of Responsible Lending/Financing and Prevention of Over-Indebtedness

Article (54): Loans/financing must be provided to customers in a responsible manner to protect them from over-indebtedness. For this purpose, the bank must comply with the following: a. Provide advice and counseling to customers and provide loans/financing suitable for their capabilities and needs, clarifying the risks incumbent upon them in case financial conditions change for any reason, and including this in the approved work procedures for granting credit facilities regarding the bank's responsibility towards customers. b. Include in the credit policy the necessary controls to ensure the bank's compliance with the provisions of this principle and use financial models and techniques based on scientific foundations and clear, transparent, and documented procedures in its policy to study the customer's credit status and evaluate their repayment capacity. c. Give utmost importance to training employees to ensure enhancing their capabilities in studying the credit status and evaluating their ability to repay financial obligations and avoiding aggressive sales methodologies.

Article (55): The bank must, before granting credit, study the credit status of the customer/guarantor to evaluate their repayment capacity through the following: a. Reviewing the credit report