Regulatory Alerts2021-11-18
Instructions for the Purchase of Consumer Finance Debt Between Finance Companies
The Saudi Central Bank issued these Instructions to regulate the purchase of consumer finance debt between licensed finance companies operating in the Kingdom. The framework mandates that purchasing companies disclose fees, obtain customer consent, and utilize the Sari fast transfer system for settlements, while prohibiting unauthorized cost transfers to customers. Concurrently, selling companies are required to issue debt statements and clearance letters within one business day, ensuring transparent credit registry updates and streamlined inter-company debt transactions.
Saudi Central Bank
No.: 43033200
Date: 1443/04/13
Attachments: None
Circular
To the Esteemed,
Gentlemen,
Peace, mercy of Allah and blessings be upon you,
Subject: Instructions for the Purchase of Consumer Finance Debt Between Finance Companies.
Based on the powers delegated to the Saudi Central Bank under the Companies for Financing Supervision System issued by Royal Decree No. (51/M) dated 13/8/1433H, and in the interest of regulating the purchase of consumer finance debt between finance companies;
you will find enclosed the Instructions for the Purchase of Consumer Finance Debt Between Finance Companies.
For your information and action, effective no later than 26/4/1443H corresponding to 1/2/2021G.
Yours sincerely,
Fahd bin Ibrahim Al-Shathri
Deputy Governor for Supervision
Distribution Scope:
- Finance companies operating in the Kingdom.
P.O. Box 2992 Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000
P.O. Box 2992, Riyadh 11169, Kingdom of Saudi Arabia Tel: +977 11 463 3000
Instructions for the Purchase of Consumer Finance Debt Between Finance Companies
Rabi' Thani / 1443H / November 2021G
The Saudi Central Bank has issued these Instructions based on the powers delegated to it under the Companies for Financing Supervision System issued by Royal Decree No. (51/M) dated 13/8/1433H.
Table of Contents
| Page No. | Chapter |
|---|---|
| 3 | Chapter One: General Provisions |
| 3 | Chapter Two: Obligations of the Purchasing Finance Company |
| 4 | Chapter Three: Obligations of the Selling Finance Company |
Chapter One: General Provisions
Article 1:
Without prejudice to the provisions of financing systems and their executive regulations, and related systems and instructions; these Instructions regulate the purchase of consumer finance debt between finance companies.
Article 2:
The finance company wishing to purchase the debt must hold a license from the Central Bank to conduct consumer financing activities.
Article 3:
The finance company may purchase consumer finance debt without the need to obtain independent approval from the Central Bank for this purpose.
Article 4:
The finance company must comply with related systems and instructions, particularly those concerning customer protection.
Chapter Two: Obligations of the Purchasing Finance Company
Article 5:
The finance company wishing to purchase the debt must inform the customer of the fees and costs resulting from the purchase of consumer finance debt.
Article 6:
The finance company wishing to purchase the debt must disclose to the customer the details and costs of the new financing before purchasing the debt, and obtain the customer's approval thereof.
Article 7:
The finance company wishing to purchase the debt must prepare a form for the application to purchase consumer finance debt, which shall include all necessary customer data, the date of application submission, and all related documents and evidence, including: (proof of the final total debt amount issued by the selling finance company, customer acknowledgment, necessary approvals from all parties to the purchase application, clarification of debt purchase terms and detailing operations and contracting requirements with the customer for granting financing, including updating data in credit registries after customer approval) and any other details necessary for the debt purchase.
Article 8:
The finance company wishing to purchase the debt must use the Saudi Fast Financial Transfers System 'Sari' to settle existing debts. The settlement payment issued via the 'Sari' system must include, after authorization:
The following data:
- Customer name
- National ID/Residence permit number
- Debt amount
- Purpose of transfer
- Debt reference number
Article 9:
The finance company wishing to purchase the debt must provide the customer with a reference number for payment, to facilitate the completion of procedures with the selling finance company.
Article 10:
The finance company wishing to purchase the debt shall not charge the customer any costs or fees for transferring the debt, except for early settlement fees or administrative fees.
Article 11:
The finance company wishing to purchase the debt shall not enable the customer to utilize the remaining financing amount - after purchasing the debt; until receiving a clearance letter from the selling finance company, and obtaining sufficient guarantees for granting financing and other regulatory and operational requirements - as applicable, provided that these details are added to the customer before executing the debt purchase in accordance with the requirement mentioned in Article (7) of these Instructions.
Chapter Three: Obligations of the Selling Finance Company
Article 12:
The selling finance company shall not refuse to issue a statement of existing obligations or a debt confirmation letter upon the customer's request, and these statements and letters should be issued within a period not exceeding one business day from the date of receiving the request.
Article 13:
The selling finance company must facilitate the debt transfer process and execute it within a period not exceeding one business day from the date of requirement completion, and shall not refuse to approve any debt purchase request unless there are sufficient reasons explained in writing to the customer.
Article 14:
The selling finance company must notify the customer of the debt settlement within a period not exceeding one business day from the date of receiving the existing financing payment, and record this in the customer's credit registry with credit information companies. Customers holding a credit card and/or monthly installment card are exempt, for whom the clearance letter is issued within a period not exceeding seven business days.
Article 15:
The selling finance company must issue a clearance letter to the customer within a period not exceeding one business day from the date of receiving the existing financing payment, and record this in the customer's credit registry with credit information companies. Customers holding a credit card and/or monthly installment card are exempt, for whom the clearance letter is issued within a period not exceeding seven business days.
Article 16:
The selling finance company shall not oblige the customer to pay any amounts for approving the debt sale, except in cases where there are outstanding amounts unpaid by the customer.
Article 17:
The selling finance company may include early settlement amounts as stipulated in Article 84 of the Executive Regulations of the Companies for Financing Supervision System in the debt confirmation letter.