Protecting consumer rights and maintaining market stability are essential to the growth of consumer finance and its contribution to the national economy, the chairman of Egypt’s Financial Regulatory Authority (FRA) said Saturday.
Islam Azzam said the FRA had issued its first comprehensive guide to the rules governing consumer finance companies, creating a unified reference for legislative and regulatory requirements and helping firms comply with them.
The guide was needed as the sector continued to expand, with more service providers, a wider range of financial products and methods, and an increasing number of regulatory decisions and instructions, Azzam said.
Clear and comprehensive rules were necessary for effective supervision, allowing companies to understand their obligations while supporting monitoring, evaluation and consistent enforcement across the market, he added.
FRA oversight covers all stages of the relationship between finance companies and customers, from marketing, advertising and disclosure of terms and conditions through to the provision and repayment of financing, Azzam said.
The guide is based on Consumer Finance Activity Regulation Law No. 18 of 2020, decisions issued by the FRA board and chairman, and relevant circulars.
It covers the establishment and licensing of companies, capital requirements, shareholder structures, corporate governance, boards of directors, key functions and committees, internal controls and branch registration.
It also sets out requirements for financial solvency, financial statements, financing contracts, credit assessments, monitoring delinquent customers and ensuring that financing is used for its intended purpose.
Companies are encouraged to adopt digital creditworthiness assessment systems based on customers’ repayment capacity and financial circumstances, Azzam said.
The guide includes Basel III requirements on capital adequacy, leverage, liquidity, provisioning, concentration risk, stress testing and periodic reporting. It also covers digital transformation, information technology governance, risk management, cybersecurity and regular penetration testing.
Consumer protection provisions require companies to clearly disclose financing costs, repayment schedules, benefits and risks. They also regulate guarantees and prohibit the use of blank signed documents or promissory notes as collateral.
The guide further addresses measures to combat money laundering and terrorist financing, customer due diligence, suspicious transaction reporting, credit bureau reporting and the role of debt collection companies.
Firms must disclose their collection arrangements and official verification channels and must address complaints concerning collection agents, the FRA said.
