The Saudi Central Bank (SAMA) announced that the new amendments to the Financial Institutions' Fees Guide will take effect tomorrow, Thursday. This step follows the expiration of the 60-day grace period granted to financial institutions to comply with the updates announced on December 22nd.
General context and the role of the central bank
These amendments fall within the supervisory and regulatory role exercised by the Saudi Central Bank (SAMA) over the Kingdom's financial sector. This role aims to ensure the stability of the financial sector, promote fair competition, and protect the rights of financial institution customers. These measures are based on the powers granted to SAMA under its bylaws and other relevant regulations, which authorize it to issue instructions and procedures to achieve these objectives. These updates represent a continuation of SAMA's ongoing efforts to develop the regulatory environment for the financial sector, in line with international best practices and the objectives of the Financial Sector Development Program, one of the programs of Saudi Vision 2030.
Key amendments and their importance
The new updates included amendments to several regulatory provisions related to administrative fees, most notably Article (9) of the Consumer Finance Regulations and Rule No. (1) of the Code of Conduct within the Principles and Rules for Protecting Customers of Financial Institutions. Among the most important amendments is the establishment of a ceiling on administrative fees that financial institutions can charge on financing products. The total of these costs and administrative fees may not exceed SAR 2,500 or 0.5% of the financing amount, whichever is less. The instructions also clarified that administrative fees may only be deducted after the contract is signed, with the exception of real estate appraisal costs, which may be deducted after obtaining the customer's initial approval.
Expected impact on the market and the consumer
These amendments are expected to have a tangible positive impact on both consumers and financial institutions. For consumers, this step will increase transparency and clarity regarding the costs of obtaining financing, protecting them from excessive fees and thus enhancing their confidence in the financial sector. For financial institutions, standardizing the fee cap creates a fairer competitive environment and encourages innovation in service delivery rather than relying on administrative fees as a primary source of revenue. Regionally, these measures reinforce Saudi Arabia's position as a leading financial center in the region that adopts the highest standards of financial consumer protection, thereby increasing the market's attractiveness to both domestic and foreign investments.
