Banking Consumer Protection Principles SAUDI ARABIAN MONETARY AGENCY CONSUMER PROTECTION DEPARTMENT JUNE 2013 Consumer Protection Department Alawwal bank logo is a registered trademark of The Saudi British Bank. Any references to Alawwal bank as a contracting party in this document shall be construed as a reference to The Saudi British Bank C.R. 1010025779 as the contracting party, following the merger of Alawwal bank and The Saudi British Bank in accordance with Articles 192 of the Companies Law.
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Banking ConsumerProtection Principles
SAUDI ARABIAN MONETARY AGENCYCONSUMER PROTECTION DEPARTMENTJUNE 2013
Consumer Protection Department
Alawwal bank logo is a registered trademark of The Saudi British Bank. Any references to Alawwal bank as a contracting party in this document shall be construed as a reference to The Saudi British Bank C.R. 1010025779 as the contracting party, following the merger of Alawwal bank and The Saudi British Bank in accordance with Articles 192 of the Companies Law.
Banking Consumer Protection Principles
PART 1: INTRODUCTION PAGE 1 Financial Consumer Protection in The Kingdom of Saudi Arabia 32 Financial Consumer Protection Implementation Model 43 Definitions 5
7 Terms and Conditions 128 Fees,ChargesandPricing 139 DataProtectionandConfidentiality 1410 AdvertisingandMarketingCommunications 1511 Account Opening and Closing 1712 AccountTransferring 1813 Banking Cards 1914 Internet and ATM Banking Services 2115 ConsumerFinance 2216 Letterof‘NoLiability’ 2217 Employees 2318 ForeignExchangeServices 2419 General 25
PART 4: ERRORS AND COMPLAINTS 20 Errors 2621 Complaints 26
PART 5: RELEVANT INSTRUCTIONS ISSUED FROM SAMA
22 Circulars 28
Contents
Banking Consumer Protection Principles
PART 1: INTRODUCTION
1. Financial Consumer Protection in The Kingdom of Saudi Arabia
TheSaudiArabianMonetaryAgency(SAMA)istheregulatorandsupervisoroflicensedfinancialinstitutionsincludingbanks,financecompanies,leasingandrealestatecompanies,insurancecompanies,moneyexchangercompaniesandcredit information companies in the Kingdom of Saudi Arabia.
Theglobalfinancialsituationhasbroughtalotofattentiononhowthefinancialservicesindustrydevelopsnewprod-uctsandservices,howthesearethensoldtoconsumersandhowconsumersareofferedconsultationandredresswhentheyhaveanissueorcomplaint.Internationalbodiesincluding‘G20’,‘FinancialStabilityBoard(FSB)’andthe‘OrganisationforEconomicCo-operationandDevelopment(OECD)’arediscussingneworrevisedstandardsandprinciples in the area of consumer protection.
Best interests: Something which does not harm consumers.
Complaint resolution: Achieving an outcome to a consumer complaint.
Conflict of interest:Whenthedutyofthebanktoactinthebestinterestsofanyconsumerinrelationtoamatterconflicts,orthereisasignificantriskthatitmayconflict,withtheowninterestsofthebank,inrelationtothatorarelated matter.
Cooling off period: Theperiodoftime(10businessdays),duringwhichaconsumercancanceltheircontractwithoutpenalty.Culture Thesetofbeliefs,values,andnormsthatrepresentstheuniquecharacterofanorganisationandprovidesthecontextforactioninitandbyit.
Prospect consumer: A natural person who is acting outside of the scope of his business and who is enquiring about availingoftheproductsandservicesofferedbyabankforthefirsttime.
Third party: An authorised agent acting on behalf of the bank
General Principles for Financial Consumer Protection
PRINCIPLE 1: Equitable and fair treatmentBanksshoulddealfairlyandhonestlywithconsumersatallstagesoftheirrelationship,sothatitisanintegralpartofthe culture of a bank. Care should also be made and special attention given to the needs of vulnerable persons and groups.
PRINCIPLE 2: Disclosure and transparencyBanks should provide up to date information about products and services to consumers. This information should be easilyaccessible,clear,simpletounderstand,accurate,notmisleadingandincludeanypotentialrisksfortheconsumer.Itshouldincludetherightsandresponsibilitiesofeachparty,includingthemechanismforeitherpartytoendthebankingrelationship,aswellasdetailsoffees,pricingandanypotentialpenaltiesthattheconsumermayincur.
PRINCIPLE 3: Financial education and awarenessBanksshoulddevelopprogrammesandappropriatemechanismstohelpexistingandfutureconsumersdeveloptheknowledge,skillsandconfidencetoappropriatelyunderstandrisks,includingfinancialrisksandopportunities,makeinformedchoices,knowwheretogoforassistancewhentheyneedit.
PRINCIPLE 4: Behaviour and work ethicBanksshouldworkinaprofessionalmannerforthebenefitofclientsduringtheirrelationship,whereabankisprimarilyresponsiblefortheprotectionofthefinancialinterestsoftheclient.
PRINCIPLE 5: Protection against fraudBanksshouldprotectandmonitorconsumerdepositsandsavingsandothersimilarfinancialassetsthroughthedevelopmentofcontrolsystemswithahighlevelofefficiencyandeffectivenesstoreducefraud,embezzlementormisuse.
PRINCIPLE 6: Protection of privacyConsumers’financialandpersonalinformationshouldbeprotectedthroughappropriatecontrolandprotectionmechanisms.Thesemechanismsshoulddefinethepurposesforwhichthedatamaybecollected,processed,held,usedanddisclosed(especiallytothirdparties).
PRINCIPLE 9: Third partiesBanksandtheirauthorisedagentsshouldhaveasanobjective,toworkinthebestinterestoftheirconsumersandberesponsibleforupholdingfinancialconsumerprotection.Banksshouldalsoberesponsibleandaccountablefortheactions of their authorised agents.
PRINCIPLE 10: Conflict of interestBanksshouldhaveawrittenpolicyonconflictofinterest,andensurethatthispolicywillhelptodetectpotentialconflictsofinterest.Whenthepossibilityofaconflictofinterestarisesbetweenthebankandthethirdparty,thisshould be disclosed to the consumer.
6.1 Be honest with the information you provide Alwaysgivefullandaccurateinformationwhenyouarefillinginanybankdocuments.Donotgivefalsedetailsorleave out important information.
6.2 Carefully read all information provided by your bankWhenyousubmityourapplication,youshouldreceivefulldetailsontheobligationsforyourserviceorproduct.Makesureyouhaveaccesstothedetailsofyourobligations,thatyouunderstandthemandthatyoucancomplywith them.
6.4 Know how to make a complaintYoucanbeproactiveinusingthisserviceandknowinghowtoescalateyourissuetohigherlevels,ifappropriate.Yourbankwillprovideyouwithdetailsonhowtocomplainandthetimeframefortheirresponse.
6.5 Use the product or service in line with the terms and conditionsDonotusetheproductorservice,exceptinaccordancewiththetermsandconditionsassociatedwiththem,andaftermakingsureofyourcompleteunderstanding.
6.7 Apply for products and/or services that meet your needsWhenmakingarequestforaproductorservice,youshouldmakesurethatissuitsyourneeds.Youshoulddiscloseallfinancialobligationswithallpartiestoensurethedecisionisbasedonyourabilitytomeetyouradditional obligations after contracting for the product or service.
6.8 Report unauthorised transactions to your bankIfyouhavediscoveredunauthorisedtransactionsonyouraccount,youshouldreportthistoyourbankimmediately.
6.9 Do not disclose your banking informationUndernocircumstancesshouldyouprovideanybankaccountdetailsorothersensitivepersonalorfinancialinformationtoanyotherparty.
6.10 Talk to your bank if you are encountering financial difficultiesBytalkingtoyourbank,youcandiscusspossiblealternativerepaymentarrangementsthatwillenableyoutofullydischargeyourresponsibilities.
6.12 Your mail addressUseyourownmailaddress(regularmailande-mail)whengivingcontactdetailstoyourbank.Donotuseotherfriends’orrelatives’mailaddresseswhichcanexposeyourfinancialinformationtoothers.
Banking Consumer Protection Principles
6.13 Power of AttorneyBecarefulwhendealingwith‘PowerofAttorney’.Knowwhatinformationthatyouaregivingaccesstoandtowhomyouaregivingpoweroveryourfinancialmatters.
6.14 Do not sign uncompleted formsMakesurealloftherequiredfieldsandnumbersarecompletedinaformthatispresentedtoyouforsigningorinitialling.Donotsignemptyorpartiallycompletedforms.
6.15 Review all of your documentsReviewallofyourdocumentsbeforeyousignthemtoensurenoerrorsaremadeintheaccountnumberoramount. Your signature is an approval and agreement of the document content.
6.16 Keep copies of your documentsKeepalldocumentsinasafeplacethatareprovidedtoyoubythebank.Theyshouldprovideyouwithacopyofsigned contracts and other relevant documents and papers.
7.1 Up to date terms and conditions for products and services should be provided to new consumers or at therequestofexistingconsumers,throughthechannelsavailablefromthebankandinaccordancewiththeconsumer’spreference,anddetailedeitherbywayofageneraltermsandconditionsbookletorbyindividualbrochures. Consumers should be encouraged to read these terms and conditions before committing to a product or service.
7.2 Abankshouldcommunicateanychangesintermsandconditionsatleast30businessdaysinadvanceofanysuchchanges being implemented.
7.4 Abankshouldincludespecificwarningstatementsinalltermsandconditions,applicationformsandadvertisements,statingclearlythepotentialconsequencesfortheconsumerinnotmeetingtheproductorserviceconditions as agreed in the application form.
8.6 Consumersshouldbeadvisedincontractsandapplicationformsthatanyfeesorcharges(greaterthanSR500),whicharerequiredfromtheconsumerinordertoavailofabankproductorservice,willbeevenlydistributedwithout amortisation over the projected lifetime of the product or service and will not be deducted in one full payment,unlesstheconsumerconfirmsbysignedagreementthattheywishtodoso.
8.9 Abankisrequiredtoprovidewrittenjustificationtoconsumersforfees,chargesandcommissionsdeductedforthe products and services held.
8.10AbankshouldnotifytheirconsumersthatanyATMcardwithdrawalsoutsideofKSAcouldresultinadditionalwithdrawal fees as per SAMA schedule of fees and charges.
9.4Abankshouldhavesufficientprocedures,systemcontrolsandchecksandemployeeawarenesstoprotectconsumerinformationandtoidentifyandresolveanycausesofinformationsecuritybreaches,wheretheymayoccur in the future.
10.3Whereabankadvertisesorpromotesanyproductorservicethatrequiresaconsumertopayafee,itshouldinclude the following disclosures:
•thenameandlogoofthebankandthebankcontactdetails.
•theadvertisementshouldstatethenameoftheproductandtheannualpercentagerateoftheproductshouldbe clear for the consumer. A bank cannot advertise a percentage rate for a term other than annual.
10.8 A bank should provide a designated area in each branch for consumers to review and complete opening of accountsandtodisplaybrochuresandformsforconsumers.
11.4Abankshouldnotrequireaconsumertohaveaminimumdeposittoopenapersonalbankaccount.However,abankhastherighttocloseanaccountiftheaccountbalanceiszeroforaperiodof90daysfromthedatethatthe account is opened.
11.5 A bank should inform a consumer of the consequences of opening and operating a bank account. This should includeaformalprocessofensuringthatconsumersarefullyawareoftheconsequencesofgrantingaccesstotheir bank accounts to third parties.
Banking Consumer Protection Principles
12. Account Transferring (implementation date 1st January 2014)
13.3Abankwillprovideappropriateelectronicchannelsandfree-phonetoassistconsumerstoeasilyreportloss,theft or misuse of their cards.
13.4Abankshouldfullyinvestigateproblems,complaintsandclaimsfromconsumers,regardingincorrecttransactionsoranydifficultiesencounteredwhenusingany‘AutomatedTellerMachine’(ATM)or‘PointOfSale’(POS)andtake corrective action in accordance with SAMA circulars related to this.
13.6 A bank should not discriminate regarding the issuance of credit cards to consumers and the approval or rejection ofarequestforacreditcardshouldbebasedontheconsumer’sfinancialpositionandtheirabilitytorepay.
13.9Abankshouldemphasisetomerchantcustomersthattheycannotpassonorimposeanyadditionalfeesorcharges(merchantservicecharge)oncreditcardholderswhenconsumersuseacreditcardforpaymentofgoodsorservicesintheirstores.Thebankresponsibleforacceptingthemerchant’sdepositsshouldensuretheamountslodgedarealignedwiththemerchants’business.Thebankshouldfacilitatetrainingofmerchants’staffon the use of POS devices and provide them with the required rules and regulations to be followed.
14.1 A bank should take appropriate measures to ensure that all online banking channels are safe and secure. A consumerwillbecompensatedforanydirectlossesincurredasaresultofpoorsecuritycontrolsforthesechannels.
14.2Abankshouldprovideafreephonelinetohelpconsumerstoeasilyreportsuspiciousorunusualtransactionsor unauthorised access to their data or accounts.
14.3Abankshouldinformconsumersofalltransactionsontheiraccountsastheyhappen,bysendingafreeSMStomobilephone.Theyshouldapplymorethanoneevidenceofidentityverificationforelectronicservicesandadvise consumers regarding electronic fraud in accordance with SAMA circulars.
14.4AbankshouldverifythatallATMsandotherelectronicservicesmeettheneedsofconsumersandleadtofacilitating the completion of banking transactions according to the latest technologies available.
15.3 A bank will deduct the installment on the date agreed upon with the consumer and in line with the date of depositoftheconsumer’ssalaryaccountwiththebank.
18.1 A bank has the right to impose fees on consumers for the transfer of funds outside the Kingdom. These fees shouldbeafixedamountandnotapercentageoftheamountbeingtransferred.Anybeneficiarybankfeesshouldbeincluded,aswellasanyfeesimposedbythecorrespondentbank.Theconsumershouldbeinformedoftheamountofallfeesbeforeconfirmingthetransferoffunds.
18.6 A bank should ensure that where an advertised product or service is denominated or priced in a foreign currency,orwherethevalueofanadvertisedproductorservicemaybedirectlyaffectedbychangesinforeignexchangerates,theadvertisementcontainsthefollowingwarningstatement:“Thisproduct/servicemaybeaffectedbychangesinforeigncurrencyexchangerates”.
Banking Consumer Protection Principles
19. General Terms
19.1Abankshouldprovideahardcopyofthe‘BankingConsumerProtectionPrinciples’tonewbankingconsumers,ortoexistingconsumerswhotakesoutanewproductorservice.Anelectroniccopyshouldbealsoavailableontheir website for all consumers.
19.5Abankwilldisplaythebranchhoursofbusinessonafixednoticeatthemainentrancetoeachbranchandontheir website and the branch should open and close in accordance with the advertised hours of business.
21.1 AbankshouldcomplywiththerulesandregulationsforcomplainthandlingasissuedbySAMAandshouldacknowledgereceiptoftheconsumer’scomplaintandsendthemacomplaintreferencenumbertotheirmobiletelephone for follow up.
a) howtomakeacomplaintandthedocumentationrequired,includingtheconsumer’srighttomakeacomplaintdirectlytoabranch,tothebank’scallcentre,byfax,throughthebank’swebsiteorusinganyotherchannelmadeavailablebythebank.
b) thatbankmanagementtakeresponsibilityfortheinvestigatingofcomplaints.
c) theofficialnameandphonenumbertobeusedbytheconsumerwhentheyneedtofollowupacomplaint.
e) thebankshouldcommunicatewiththeconsumerregardingthecomplaintwithinoneweekfromthedateofreceiptintheabsenceofresolutionduringthisperiod.Ifthecomplaintisnotresolvedinoneweek,thebankwillcommunicateandupdatewithin10businessdaystoadvisehowlong(itisexpectedthatresolution will take.