Law No. 18 of 2020 (Updated 2022) on Regulating Consumer Finance Activities

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Law No. 18 of 2020 dated 2020/03/17 on issuing the Law on Regulating Consumer Finance Activities
Article 1 Issuance
The provisions of the accompanying Law shall apply regarding the regulation of consumer finance activities.
Article 2 Issuance
Companies licensed by the Financial Regulatory Authority to conduct consumer finance activities in accordance with the provisions of the accompanying Law shall be considered companies that provide services in the field of non-banking financial markets in accordance with the provisions of Law No. 10 of 2009 on Regulating Non-Banking Financial Markets and Instruments.
Article 3 Issuance
The provisions of the accompanying Law shall not apply to finance activities conducted by banks subject to the supervision of the Central Bank of Egypt, even if for the purpose of financing the purchase of consumer goods or services.
Nor shall its provisions apply to activities regulated under the provisions of laws on real estate finance, financial leasing, factoring, microfinance, or the purchase of real estate through real estate developers.
Article 4 Issuance
In matters not explicitly addressed in the accompanying Law, the provisions of the Law on Joint Stock Companies, Companies Limited by Shares, Limited Liability Companies, and Single-Person Companies issued by Law No. 159 of 1981, and Law No. 10 of 2009 on Regulating Non-Banking Financial Markets and Instruments, shall apply to consumer finance companies. The provisions of the Commercial Law issued by Law No. 17 of 1999 and Law No. 100 of 1957 concerning certain commercial sales shall not apply to consumer finance companies and consumer finance providers subject to the provisions of the accompanying Law.
Article 5 Issuance
Except for disputes and lawsuits under the jurisdiction of the State Council, the Economic Courts shall have jurisdiction to adjudicate disputes and lawsuits arising from the application of the provisions of the accompanying Law, including interim and substantive execution disputes, as well as criminal lawsuits arising from the crimes stipulated therein.
Article 6 Issuance
Every person conducting consumer finance activities regulated by the provisions of the accompanying Law shall regularize their status in accordance with its provisions within six months from the date of its implementation.
The Board of Directors of the Financial Regulatory Authority may, by its decision, extend the regularization period stipulated in the preceding paragraph for one or more similar periods not exceeding two years in total.
Article 7 Issuance
This Law shall be published in the Official Gazette and shall take effect from the day following its publication.
This Law shall be sealed with the State seal and enforced as one of its laws.
Issued at the Presidency on 21 Rajab, 1441 AH
(Corresponding to March 16, 2020 AD).
Abdel Fattah El-Sisi

Law No. 18 of 2020
Law on Regulating Consumer Finance Activities
Article 1
For the application of the provisions of this Law, the following words and expressions shall have the meanings indicated beside each of them:
-1 The Authority: The Financial Regulatory Authority.
-2 The Board of Directors of the Authority: The Board of Directors of the Financial Regulatory Authority.
-3 Consumer Finance: Any activity aimed at providing financing for the purchase of goods and services for consumption purposes, provided it is conducted on a regular basis, including financing through commercial payment cards or any payment method approved by the Central Bank. Consumer finance shall not be considered, for the application of the provisions of this Law, financing where the repayment period for its installments is less than the threshold issued by a decision of the Board of Directors of the Authority, which shall in no case be less than six months. -4 Consumer Finance Company: Any company licensed to conduct consumer finance activities and subject to the supervision of the Financial Regulatory Authority, including companies that provide consumer finance through commercial payment cards or any payment method approved by the Central Bank based on their contract with a network of sellers and providers of consumer goods and services. -5 Consumer Finance Providers: Retailers or distributors of goods who conduct consumer finance activities. -6 Commercial Payment Cards: Non-banking commercial cards issued in accordance with the rules established by the Central Bank, used to provide consumer finance. -7 Consumer Finance Customers: Any person who obtains financing under transactions covered by the controls set forth in this Law for purposes outside the scope of their trade or profession. -8 Fee-Based Guarantee: A contract whereby a person guarantees the fulfillment of a consumer finance customer's obligation by undertaking to the consumer finance company or provider to fulfill this obligation if the customer fails to do so, in exchange for a fee.
Article 2
The provisions of this Law shall apply to the consumer finance activity provided by consumer finance companies regarding the following goods and services:

• Vehicles and passenger cars of all types.
• Durable goods, including electrical and electronic appliances.
• Educational services.
• Medical services.
• Travel and tourism services.
• Any other goods or services approved by the Board of Directors of the Authority.
  The provisions of this Law shall also apply to the consumer finance activity conducted by consumer finance providers regarding the following goods:
• Vehicles and passenger cars of all types.
• Durable goods, including electrical and electronic appliances.

Article 3
The conduct of consumer finance activities shall be in accordance with the provisions of this Law and the conditions, controls, and standards issued by a decision of the Board of Directors of the Authority.
In all cases, licensed consumer finance companies and consumer finance providers are prohibited from accepting deposits.
Article 4
A consumer finance company or consumer finance providers may register the rights established in their favor against the movable assets subject to consumer finance contracts in the Movable Collateral Register established in accordance with the provisions of the Law on Regulating Movable Collateral issued by Law No. 115 of 2015.
Article 5
Consumer finance companies, their directors, advisors, consumer finance providers, and employees of any of them are obligated to maintain strict confidentiality regarding their customers, and not to disclose any information about them or their transactions to third parties without their prior written consent and within the scope of such consent, except in cases where specific information must be provided as required by applicable laws.
Article 6
Consumer finance companies and consumer finance providers are bound by the marketing and advertising controls issued by the Authority, particularly those related to disclosing how the return rate is calculated and determined, and by notifying the Authority of the volume and nature of their activity and any obstacles hindering it, as requested by the Authority.
Article 6 Bis
The activity of fee-based guarantee in consumer finance activities may not be conducted unless registered in the register prepared by the Authority for this purpose. Banks and credit guarantee companies licensed under the Central Bank and Banking System Law issued by Law No. 194 of 2020 are exempted from this. The Board of Directors of the Authority shall establish rules, conditions, and procedures for registration and deletion in the aforementioned register in Paragraph 1 of this Article, and registration in this register shall be free of charge. The Board of Directors of the Authority shall also establish controls regarding the conditions for conducting the activity in the aforementioned register, particularly as follows:
(a) Regarding legal persons: Compliance with the provisions of Articles (5 and 12) of this Law.
(b) Regarding natural persons: Commitment to concluding a contract with the customer that includes at least the following:

• Clearly specifying the obligation to be guaranteed under the guarantee contract.

• All collateral obtained by the guarantor under the guarantee contract.

• The fee obtained by the guarantor under the guarantee contract.
  *Added by Law No. 158 of 2022.
  Article 7
  Applications for establishing consumer finance companies shall be submitted to the Authority on the prescribed form, accompanied by the documents specified by the Authority, including in particular:

• A bank deposit certificate confirming that the issued capital has been fully paid.

• Three copies of the company's preliminary contract and articles of association.

• A request from the agent of the founders, specifically including the company name, names of the founders, and issued and paid capital.

• A declaration from the company's auditor accepting the appointment.
  The Authority shall maintain a register recording the establishment applications of the aforementioned companies, and these applications shall be recorded with sequential numbers according to the date of receipt of each. Each application shall have a dedicated file in which the establishment documents and all related procedures are deposited. A committee comprising technical and legal elements shall be formed by a decision of the Authority's Chairman to review the establishment of these companies.
  Article 8
  Consumer finance activities may not be conducted except by companies licensed by the Authority in accordance with the conditions and controls stipulated in this Law and the decisions issued in implementation thereof, after registration with the Authority in a special register for this purpose in accordance with the controls and procedures issued by a decision of the Board of Directors of the Authority. The Board of Directors of the Authority shall determine the licensing fee for conducting the activity for the company, not exceeding one hundred thousand Egyptian pounds, to be paid according to legally prescribed payment methods. The Authority may license a consumer finance company to conduct other non-banking financial activities, in accordance with the controls established by the Board of Directors of the Authority in this regard, including in particular the requirement to maintain separate accounts and financial statements for each activity, and to meet the minimum issued and fully paid capital requirements for all licensed non-banking financial activities. The license application shall be accompanied by the company contract, articles of association, commercial register, and tax card, in addition to evidence of meeting the conditions stipulated in Article (9) of this Law and other documents specified by the Board of Directors of the Authority. In case of rejection, the Authority shall issue a reasoned rejection decision within thirty days from the date of submission of the application containing all required documents. The applicant shall have the right to appeal to the Appeals Committee stipulated in Article (23) of this Law in case of rejection or non-response. The company licensed to conduct the activity shall be registered in the dedicated register at the Authority.
  Article 9
  The following conditions are required to obtain a license to conduct consumer finance activities:
  -1 The company must take the form of a joint stock company, and its issued capital must not be less than the threshold approved by the Board of Directors of the Authority, to be fully paid, and in no case less than ten million Egyptian pounds.
  -2 The company's work must be limited to consumer finance activities, unless the Authority licenses it to conduct other non-banking financial activities.
  -3 At least 50% of the company's capital must be held by legal person founders, and the shareholding of financial institutions must not be less than 25% of the company's capital. This is exempted for companies that conducted consumer finance activities before the implementation of this Law, unless they are acquired or their ownership structure is changed by more than one-third of their issued capital. -4 The holders of the positions of Managing Director and Chief Financial Officer in the company must meet the professional qualifications and experience issued by a decision of the Board of Directors of the Authority. -5 The company must possess the necessary equipment, technological infrastructure, and information systems to conduct the activity in accordance with the requirements specified by the Authority. -6 The company must have internal regulations governing the controls and procedures for granting financing and determining financing ratios based on customers' repayment capacity, commitment to credit bureau checks with one of the credit reporting companies, risk management and financial adequacy mechanisms, and handling customer complaints, which directors and employees must comply with. -7 Any other conditions established by the Board of Directors of the Authority.

Article 10
Consumer finance companies must conclude a contract with their customers according to the model established by the Authority, which must specifically include the following:
-1 Clear and unambiguous specification of the goods or services subject to financing.
-2 Statement of the price of the goods or services at purchase, and the amount paid by the financing customer at the time of contract conclusion.
-3 Specification of the financing amount provided by the company, the repayment period, the number of installments, their terms and values, and the return rate used as the basis for calculating the financing value, and whether it is fixed or variable, without being bound by the limits stipulated in any other legislation. -4 Statement of the collateral obtained by the finance company, including the prohibition of disposal until fulfillment, in accordance with the credit policy established by the company with the Authority's approval. -5 Customer's declaration to the company authorizing the disclosure of financing data to the Authority and credit reporting companies. -6 The financing customer's right to early settlement and the conditions associated therewith. -7 The company's right to sell or discount its due debts. -8 The contract must include the company's license number and evidence of its supervision and oversight by the Authority. Consumer finance companies may provide financing through commercial payment cards or any payment method approved by the Central Bank based on their contract with a network of sellers and providers of consumer goods and services. In this case, the companies are obligated to conclude a contract with their customers according to the model established by the Authority, which must specifically include clauses (4) to (8) of the preceding paragraph, in addition to the following:
-1 Statement of the sellers and providers of goods and services at the time of contract conclusion, and the method of updating them by deletion or addition throughout the contract period.
-2 Specification of the maximum financing amount provided by the company, its repayment conditions, and the return rate used as the basis for calculating the conversion, and whether it is fixed or variable.
Article 11
Consumer finance companies are obligated to prepare periodic and annual financial statements in accordance with Egyptian accounting standards. The Board of Directors of the Authority shall issue a decision on other rules for preparing financial statements, their deadlines, submission to the Authority, and deadlines for presenting them to the company's General Assembly. The company's accounts shall be audited by one or more auditors registered in the register maintained for this purpose by the Authority, in accordance with Egyptian auditing standards.
Article 12
Companies licensed to conduct consumer finance activities must comply with the rules and standards established by the Board of Directors of the Authority, which must include at a minimum the following:
-1 Governance requirements regarding the formation of the Board of Directors, its subsidiary committees, required disclosures, and their timing.
-2 Financial adequacy standards.
-3 Controls for determining financing ratios based on customers' repayment capacity.
-4 Minimum calculation for impairment and provisions for doubtful financing.
-5 Controls for opening, transferring, and closing branches.

-6 Anti-money laundering and counter-terrorist financing controls, taking into account instructions issued by the Anti-Money Laundering and Counter-Terrorist Financing Unit and after coordination with relevant authorities.
Article 13
Licensed consumer finance companies are obligated to submit a quarterly report to the Authority according to the model prepared by the Authority, which must include at least the following:
-1 The company's operational results.
-2 The volume of financing and its distribution according to the goods and services subject to financing.
-3 The volume of non-performing financing and its percentage of the company's total activity.
-4 Compliance with applying financing ratios based on customers' repayment capacity.
Article 14
Consumer finance providers whose main activity is the distribution or sale of goods subject to financing must obtain a license from the Authority and register in a special register with it when their annual financing volume exceeds the threshold determined by the Board of Directors of the Authority, which shall not be less than twenty-five million Egyptian pounds. The following conditions are specifically required:
-1 The consumer finance provider must take the form of a capital company such as a joint stock company, limited by shares company, or limited liability company.
-2 An amount not less than the minimum threshold determined by the Board of Directors of the Authority, which shall not be less than ten million Egyptian pounds, must be allocated to conduct consumer finance activities.
-3 The Executive Director responsible for the consumer finance activity must meet the professional qualifications and experience issued by a decision of the Board of Directors of the Authority.
-4 The company must possess the necessary equipment, technological infrastructure, and information systems to conduct consumer finance activities in accordance with the requirements specified by the Authority.
-5 The company must have internal regulations governing the controls and procedures for granting financing and determining financing ratios based on customers' repayment capacity, commitment to credit bureau checks with one of the credit reporting companies, risk management and financial adequacy mechanisms, and handling customer complaints, which directors and employees must comply with. -6 The company must maintain separate accounts and financial statements for the consumer finance activity and comply with the provisions of Article (11) of this Law. -7 The company must conclude a contract with its customers in accordance with the provisions of Article (10) of this Law. -8 Any other conditions established by the Board of Directors of the Authority.
Article 15
The license application from consumer finance providers shall be accompanied by the company contract, articles of association, commercial register, and tax card, in addition to evidence of meeting the conditions stipulated in Article (14) of this Law and other documents specified by the Authority. The Authority shall rule on the license application by approval or rejection via a decision issued within thirty days from the date of submission of the application containing all required documents. In case of rejection, the decision must be reasoned. The company licensed to conduct the activity shall be registered in the dedicated register at the Authority. The Board of Directors of the Authority shall determine the licensing fee for conducting the activity for the company, not exceeding one hundred thousand Egyptian pounds, to be paid according to legally prescribed payment methods.

Article 16
Licensed consumer finance providers must comply with the rules and standards established by the Board of Directors of the Authority, which include in particular the following:
-1 Financial adequacy standards.
-2 Controls for determining financing ratios based on customers' repayment capacity.
-3 Minimum calculation for impairment and provisions for doubtful financing.
-4 Anti-money laundering and counter-terrorist financing controls, taking into account instructions issued by the Anti-Money Laundering and Counter-Terrorist Financing Unit and after coordination with relevant authorities in this regard.
Article 17
An association comprising consumer finance companies and consumer finance providers shall be established, named the Egyptian Association of Entities Working in Consumer Finance. It shall enjoy independent legal personality and be subject to the supervision and oversight of the Authority. The Association shall be responsible for providing recommendations on developing the activity and increasing awareness of it, adopting supporting initiatives, expressing opinions on regulating legislation, developing and training employees, and coordinating among members. The Association's statutes shall be issued by a decision of the Board of Directors of the Authority, provided that they specify the Association's resources and the representation ratios of activities in its Board of Directors.
Article 18
The Association shall be registered in a special register with the Authority after paying a fee of five thousand Egyptian pounds, and its establishment decision and statutes shall be published in the Egyptian Gazette at the Association's expense.
All entities licensed by the Authority to operate in the consumer finance field are obligated to join the Association and comply with its statutes.
Without prejudice to the measures under the jurisdiction of the Board of Directors of the Authority or its Chairman according to the provisions of this Law, the Association may take administrative measures against its members stipulated in its statutes in case of violation of its statutes or sound professional practices.
Article 19
The Authority shall work to raise awareness of consumer finance activities, protect the rights of participants in it, and maintain the competitive climate that aids its growth.
The Authority shall prepare and publish necessary studies and statistics to introduce the consumer finance activity.
Article 20
Individuals designated by a decision of the Minister of Justice upon the request of the Chairman of the Board of Directors of the Authority shall have the status of judicial police officers in proving crimes committed in violation of the provisions of this Law or decisions issued in implementation thereof. For this purpose, they shall have the right to access registers, books, documents, data, and electronic media at the premises of consumer finance companies and providers, their branches, and locations where they are located. The persons in charge of the aforementioned entities must provide the aforementioned employees with the requested data and copies of documents for this purpose.

Article 21
The Authority shall receive complaints submitted by interested parties dealing with consumer finance companies and providers regarding violations of the provisions of this Law or decisions issued in implementation thereof. The Authority is obligated to respond to these complaints within a period not exceeding one month from the date of completing the documents specified by the Authority. A decision by the Authority's Chairman shall organize the procedures for submitting complaints, adjudicating them, and notifying submitters of the response.
Article 22
In case of a consumer finance company's violation of the provisions of this Law or decisions issued in implementation thereof, loss of any licensing condition, or committing acts likely to threaten market stability or the interests of its shareholders or participants, the Board of Directors of the Authority may take one or more of the following measures:
-1 Issuing a warning to the company to rectify the violation within the specified period and conditions.
-2 Convening the company's Board of Directors or General Assembly, with a representative of the Authority present, to review the alleged violations and take necessary steps to rectify them.
-3 Convening the company's General Assembly to review the removal of the Chairman of the Board of Directors or the Managing Director, or both.
-4 Dissolving the company's Board of Directors and appointing a commissioner to temporarily manage the company's affairs for a period not exceeding six months, which may be extended for another six months. The commissioner shall present the matter to the General Assembly during the appointment period to appoint a new Board via the prescribed legal instrument. -5 Prohibiting the conclusion of new financing contracts for a period not exceeding six months. -6 Revoking the license to conduct consumer finance activities or provide consumer finance. The measures stipulated in clauses (1, 5, and 6) of this Article may also be taken against consumer finance providers upon the occurrence of any of the circumstances stipulated in the first paragraph of this Article, including the dismissal of the Executive Director responsible for the consumer finance activity. The Chairman of the Board of Directors of the Authority may, in case of a consumer finance company's violation of any provisions of this Law, close its premises administratively. The measures stipulated in clauses (1) and (2) of this Article may be issued by the Authority's Chairman. The Chairman may also take any of the measures stipulated in clauses (4) and (5) of this Article if the risk is likely to cause irreparable damage, for a maximum period of one month or until presentation to the Board of Directors of the Authority, whichever is sooner. The Council may, to ensure market stability, protect the rights of participants with consumer finance companies and providers, or in case either faces financial problems affecting their financial position, oblige them to enhance their financial adequacy according to a specified timeline.
Article 23
One or more committees shall be established to review appeals submitted by interested parties against administrative decisions issued in application of the provisions of this Law. A decision by the Board of Directors of the Authority shall be issued for the formation of each committee, chaired by one of the Vice Chairmen of the State Council and comprising two Council of State advisors selected according to the law organizing the State Council, a representative of the Authority chosen by its Chairman, and an expert member. The appellant may appear before the committee in person, through a representative, or by a proxy. The decision of the Board of Directors of the Authority shall determine the committee's formation, jurisdiction, members' allowances, appeal review procedures, adjudication, and deadlines for these procedures. The appeal against the decision before this committee must be filed within sixty days from the date of notification or certain knowledge thereof. The committee shall issue its decision on the appeal within a period not exceeding thirty days from the date of completing the required documents and data. Its decision shall be final and enforceable. A lawsuit filed with the competent court shall not be accepted unless the aforementioned committee is first approached and the deadline for filing the appeal and adjudicating it has expired. Filing an appeal with the committee shall suspend the legally prescribed deadlines for the lapse or statute of limitations of rights or filing a lawsuit, until the expiration of the adjudication deadline for the appeal.
Article 24
Without prejudice to any harsher penalty stipulated in the Penal Code or any other law punishing the crimes stipulated in the following articles with the penalties prescribed therein.
Article 25
Whoever conducts consumer finance activities subject to the provisions of this Law without obtaining a license therefor shall be punished with imprisonment and a fine not less than two hundred thousand Egyptian pounds and not exceeding one million Egyptian pounds, or with one of these two penalties. The same penalty shall apply to whoever violates any of the provisions of Article (5) of this Law, and fines shall multiply according to the number of victims.
Article 26
Whoever violates any of the contracting controls with financing customers stipulated in Articles (10 and 14) of this Law or the marketing and advertising controls for consumer finance activities stipulated in Article (6) of this Law shall be punished with a fine not less than ten thousand Egyptian pounds and not exceeding one hundred thousand Egyptian pounds.
Article 27
Whoever delays in submitting financial statements and periodic reports specified by the Board of Directors of the Authority shall be punished with a fine not less than five hundred Egyptian pounds and not exceeding one thousand Egyptian pounds for each day of delay.
The fine shall be doubled at its minimum and maximum limits for each day of delay if the delay exceeds one month.
Article 28
Whoever intentionally prevents any Authority employee holding judicial police status from performing any duties assigned by this Law, as well as whoever intentionally withholds requested data, documents, or electronic media without legal justification, shall be punished with imprisonment not exceeding one month and a fine not less than twenty thousand Egyptian pounds and not exceeding two hundred thousand Egyptian pounds, or with one of these two penalties.
Article 28 Bis
Whoever uses fraud or deception to refuse to fulfill all or part of their financial obligations stipulated under a financing contract concluded in accordance with the provisions of this Law shall be punished with imprisonment and a fine not less than five thousand Egyptian pounds and not exceeding double the remaining value of the financing subject to the financing contract, or with one of these two penalties. The crimes stipulated in this Article are exempted from the provisions referred to in Article (32) of this Law. Settlement in these crimes may be reached either before the Public Prosecution or the competent Court, as applicable, in any state the lawsuit is in. Settlement shall extinguish the criminal lawsuit regarding the crime for which settlement was reached. The Public Prosecution shall order the suspension of penalty execution if settlement is reached during execution, even after the judgment has become final. *Added by Law No. 158 of 2022.
Article 28 Bis 1
Whoever conducts the fee-based guarantee activity in consumer finance activities without being registered in the register prepared for this purpose shall be punished with imprisonment and a fine not less than fifty thousand Egyptian pounds and not exceeding five hundred thousand Egyptian pounds, or with one of these two penalties. *Added by Law No. 158 of 2022.
Article 29
Whoever violates decisions issued in implementation of the provisions of this Law shall be punished with a fine not exceeding fifty thousand Egyptian pounds.
Article 30
The person responsible for the actual management of the company shall be subject to the penalties prescribed for acts committed in violation of the provisions of this Law, once their knowledge thereof is established or the violation occurred due to their failure to fulfill their official duties.
Article 31
In addition to the penalties prescribed for the crimes stipulated in the preceding articles, a person convicted of one of these penalties may be sentenced to prohibition from conducting the activity in which the crime was committed, for a period not exceeding five years.