Clarification of Article 83 of the Implementing Regulations of the Finance Companies Control Law and Article 9 of the Consumer Financing Regulations

In the Name of Allah, the Most Gracious, the Most Merciful

Saudi Arabian Monetary Authority
Head Office

Banking Supervision Department
Ref: .................................... M.A.S.
Date: 1436/06/30
Attachments: ....................................

Circular

Subject: Clarification of the Provisions of Article (83) of the Implementing Regulations of the Finance Companies Control Law and Article (9) of the Consumer Financing Regulations

Dear Sir/Madam,
Peace, mercy, and blessings of God be upon you:

With reference to Article 83 of the Implementing Regulations of the Finance Companies Control Law, which stipulates that "the fees, commissions, and administrative service costs charged by a finance company to the beneficiary shall not exceed the equivalent of 1% of the financing amount or 5,000 Saudi Riyals, whichever is less", and to Article 9 of the Consumer Financing Regulations, which stipulates that "the fees and administrative service costs charged by a financing entity to the beneficiary shall not exceed the equivalent of 1% of the financing amount or 5,000 Saudi Riyals, whichever is less".

The Authority wishes to clarify that the fees and administrative service costs referred to in the aforementioned articles include all amounts the beneficiary is required to pay in addition to the financing amount and the cost of time, encompassing all unavoidable fees, costs, and commissions required to obtain the financing, including but not limited to financing application review fees, property valuation fees, property inspection fees, registration fees, etc. The Authority further emphasizes that communication with relevant authorities to complete financing procedures (such as property valuers and registration entities) and payment of their due costs rests solely with the bank, and it is not permissible to delegate the beneficiary (customer) to pay any amounts related to a third party. Furthermore, all fees and expenses that the beneficiary must pay to obtain the financing must be included in the calculation of the Annual Percentage Rate (APR).

For your information and necessary action, effective from the date of this circular.

Yours sincerely,

Abdulaziz bin Abdulrahman Al-Halisi
Deputy Governor for Supervision

Distribution Scope:

• Banks operating in the Kingdom.
• Finance companies operating in the Kingdom.
• Monetary Policies and Financial Stability Department.

P.O. Box 2992, Riyadh 11169, Central Telegraph, Telex: 404400, Tel: 4633000, Fax: 4662119