In a strategic move aimed at enhancing transparency and efficiency in the Saudi market, the Saudi Organization for Certified Public Accountants (SOCPA) has approved new regulations governing the practice of non-securities financial advisory services. This decision comes as part of ongoing efforts to develop the regulatory environment for the Kingdom's financial and professional sectors, in line with the objectives of Vision 2030 and the Financial Sector Development Program.
General context and objectives of the new organization
These new regulations come in response to the rapid growth of the Saudi economy and the drive to diversify income sources away from oil. With the increasing activity of small and medium-sized enterprises (SMEs) and the expansion of local and foreign investments, the need for a regulated and reliable financial advisory sector offering high-quality professional services has become paramount. Through these regulations, the Authority aims to close any regulatory gaps, protect consumers and businesses from unprofessional practices, and enhance confidence in the advisory services offered in the market.
The importance of the decision and its expected impact
These regulations are expected to have a multifaceted positive impact. Domestically, they will enhance the competence of practitioners by establishing clear qualification and licensing standards, ensuring clients receive accurate and professionally sound advice. The decision also strengthens the protection of funds and reduces the risks associated with unqualified consultants. Regionally and internationally, regulating this vital sector will bolster the Kingdom's reputation as a leading financial center and make its investment environment more attractive to foreign investors seeking markets with robust regulatory frameworks and world-class standards.
Key features of the regulatory rules
The new regulations stipulate that financial advisory services for non-securities matters may only be practiced after obtaining an official license from the Authority. However, an exception is made for certified public accountants licensed to practice accounting, who may provide these services without a separate license, reflecting the integration of financial professions. To ensure transparency, the Authority will establish a public register of licensees containing all essential information about each licensee.
Licensing Requirements
The authority has set a number of precise requirements for granting the license, including:
- The applicant must be a Saudi national, fully competent, and available to practice the profession.
- Having an academic qualification of at least a bachelor's degree in finance, accounting, or finance, or equivalent accredited certificates.
- Passing the qualification and training programs decided by the Authority to ensure keeping up with the latest professional practices.
- Having at least five years of professional experience in related fields is required for those who do not meet some academic requirements.
- The applicant must be of good character and conduct and must not have been convicted of a crime involving moral turpitude or dishonesty.
The rules also made it possible to grant a license to part-time employees under specific conditions and for a period not exceeding three years.
Professional obligations and penalties
The regulations require licensees to adhere to all applicable rules and regulations, maintain work records for a minimum of five years, and practice the profession in person to ensure the highest degree of accountability. They also emphasize the necessity of transparency and accuracy and prohibit the issuance of any misleading reports. In the event of violations, the regulations stipulate graduated penalties ranging from a warning to suspension of practice for up to one year, or permanent revocation of the license, while preserving the violator's right to appeal to the Administrative Court.
