The Saudi Arabian Monetary Authority (SAMA) has announced the issuance of controls and procedures for the collection from customers. In this regard, SAMA emphasized on banks and financing companies operating in the Kingdom to adhere strictly to the application of these controls and the equal and fair treatment with customers throughout all stages of this relationship between them.

These controls were based on the Financial Companies Control Law promulgated by Royal  Decree No. M/51 dated 13/08/1433H and the Banking Control Law promulgated by Royal Decree No. M/5 dated 22/02/1386H authorizing SAMA to regulate the financial and banking sectors.

Ahmad Bin Abdullah Al-Shiekh, Deputy Governor for the Supervision asserted that these controls are applied on banks and financing companies operating under the supervision of SAMA in order to organize the collection mechanism and communicate with individual customers and their guarantors to protect rights of all parties. Moreover, it ensures that staff are committed to providing customers with accurate and professional information to customers regarding their status of default and formal procedures that the funding entity is entitles to take.

Al-Shiekh also pointed out that banks are prohibited to deduct any amounts from customers’ accounts without any judicial judgement, prior approval from the client, garnishee order or if it dictated so in the financing contract. Al-Sheikh stressed that banks must reschedule indebtedness at customer’s request in the event of a change in the circumstance of the customer (compulsory) without granting new financing, without additional fees and without any change in the cost of the term. These controls are the minimum of which financing companies must comply to. The financing entities must work on developing its internal procedures in accordance with the nature and size of its business and best local and international standards and practices.

       In accordance with rules and procedures of collection from individual customers, SAMA required all entities engaged in financing activities to take care to communicate with customers prior reaching our to competent judicial authorities, while complying with the documented means of communication that the financing authority is entitled to use when communicate with customers or their guarantors including registered mail, national address, text messages and phone calls.

Regarding procedures of collection from customers’ accounts, SAMA prohibited banks from deducting any amount excluding the aforementioned reasons. SAMA prohibited deducting more than one month installment for each financing during the one-month deposit cycle, unless there is a judgment or judicial decision, prior approval by the client or deducting the monthly installment on a date preceding the agreed maturity date or the deducting of the end service benefits unless there is a judgment or judicial decision.

SAMA also instructed financing entities to specify the date of deduction in accordance with the date of the monthly salary deposit; to be specified in the payment schedule or agreed upon through one of the documented means of communication, as well as the obligation to deduct the monthly installment on the agreed date. If the financing entities fails to deduct on the agreed date, they are obliged to add a similar term at the end of the financing period without additional costs or charges. Noting that they must notify the customers officially through documented means of communication. SAMA obliged banks to reschedule debts in the event of a change in the client’s condition. Banks must execute the scheduling within a period not exceeding 30 days from the date of providing the client with the necessary documents, except for the financing contracts granted by guarantee of the asset. Banks and financing entities are obliged to reschedule the indebtedness in case of change in the client’s status (optionally) upon his request without additional costs or charges yet it is possible to adjust the cost of the term.

Regarding the procedures of dealing with default customers, SAMA asserted that the financing provider has the right to initiate regular procedures on the default client with the competent judicial authorities, with the need to notify the default clients for more than three consecutive months or five intermittent months. Noting that the last attempt of contacting the client must be through the national address. It is also requires the funding entities to adhere to the judicial decision or judgment order if any, unless the two parties agree otherwise. These entities are obliged to take into account the circumstances of the clients against whom judicial executions decisions are made in their favor when they provide the necessary guarantees, so that they are obliged to provide the option to schedule the debt with the possibility of changing the cost of the term and at no additional charge.