General Requirements

1. 2.1.3.1Licensed Financial Institutions that offer Credit Products must comply with the requirements in Section 2.1.1 of this Article as applicable, in addition to complying with the requirements of this Section.

Prior to Providing a Credit Product and/or Service

1. 2.1.3.2Licensed Financial Institutions must provide Consumers with the expected Annual Percentage Rate that will be charged on the offered Credit Product to facilitate comparison between Credit Products and between institutions.
2. 2.1.3.3Licensed Financial Institutions must disclose whether security, a guarantor, co-signer or collateral is required for a Credit Product before the consumer signs the contract. Licensed Financial Institutions must fully disclose the purpose of these requirements and the conditions placed on the pledging of security and any other collateral including the Licensed Financial Institution’s rights to dispose of them and the manner in which they may be disposed.

At Point of Entering the Contract

1. 2.1.3.4Licensed Financial Institutions must disclose:
   1. a.How the interest/profit on the Credit Product will be calculated (including the date from which interest/profit is incurred) and provide an example of the calculation to the Consumer; and
   2. b.How the payments are allocated between outstanding balance and interest / profit as per the Reducing Balance Method.
2. 2.1.3.5Licensed Financial Institutions must disclose that they are not permitted to charge interest/profit on accrued interest/profit of any Credit Product granted to Consumers in accordance with Article (121), Clause 3 in Decretal Federal Law No. (14) of 2018, Regarding the Central Bank & Organization of Financial Institutions and Activities.
3. 2.1.3.6For variable rate loans/financing, Licensed Financial Institutions must disclose to Consumers the potential impact of an increase in the Annual Interest/Profit Rate on the loan/financing. The disclosure must explain via an illustrative example:
   1. a.The potential consequences of an increase to the rate on the loan/financing payment amounts;
   2. b.The change in the allocation of the payment between interest/profit amount and a reduction in outstanding balance;
   3. c.The impact on the tenor if any; and
   4. d.The consequences of any increase in rates on the amount of a deferred payment or an accumulated balloon payment during or at the end of the loan/financing tenor.
4. 2.1.3.7Licensed Financial Institutions must disclose whether early settlement is possible and which Permissible Fees are payable if the Credit Product is terminated before the end of the tenor along with, how the Fees will be calculated and when they are payable.
5. 2.1.3.8The Key Facts Statement on a financing product must set out a detailed example relevant to the product with the calculation and cost of the applicable Early Settlement Fees where applicable.
6. 2.1.3.9When a Licensed Financial Institution decides to sell a Credit Product to a Consumer, the Licensed Financial Institution must issue a written offer that contains the approved loan/financing amount, all the terms and conditions and for financing with a tenor, the cumulative total of all repayment/payment amounts to be paid by the end of the tenor based on the initial interest / profit rate, and a separate amount that will total the expected amount of interest/profit that would be paid over the tenor.
7. 2.1.3.10Licensed Financial Institutions must inform Consumers that funds approved on a Credit Product, except for mortgages and credit cards, will be disbursed within 10 complete business days of signing the contract or within such other time frame that is agreed to and specified in the contract. Complying with the period of time for disbursement of funds is subject to the Consumer and / or third party providing the required and properly completed documents and meeting the agreed conditions. If it is not possible to release the funds within the time limit, the Licensed Financial Institution must advise the Consumer in Writing immediately as to the reason for the delay and the date by which the funds will be available. As a consequence of the delay caused by the Licensed Financial Institution, the Consumer retains the option to cancel the contract without cost or penalty before the funds are made available.
8. 2.1.3.11At the point of entering the contract, except for credit cards, Licensed Financial Institutions must provide Consumers with a complete repayment/payment schedule document including the following but as may be applicable:
   1. a.The initial amount of the loan/financing;
   2. b.The Annual Interest/Profit Rate including whether it is fixed or variable;
   3. c.The expected tenor;
   4. d.The date of the first installment;
   5. e.The number of installments to be paid;
   6. f.The frequency of repayment/payment;
   7. g.The amount to be paid for each installment;
   8. h.The allocation of each installment between the principal and interest/profit payments;
   9. i.The decline in principal amount of the loan/financing with each payment; and
   10. j.The total cost of the loan/financing in terms of the total interest/profit paid by the Consumer.
9. 2.1.3.12For Shari’ah compliant financing products:
   1. a.Licensed Financial Institutions must inform a Consumer when late payment Fees/commitment for contribution towards charity will be imposed and the amount to be imposed. Licensed Financial Institutions must also disclose to Consumers the manner in which the late payment Fees/commitment for contribution towards charity will be calculated; and
   2. b.Late payment Fees/commitment for contribution towards charity must be based on an administrative cost and must not include any remuneration to the Licensed Financial Institution that could be considered unlawful charging of interest/profit on accrued interest/profit.
10. 2.1.3.13Where Licensed Financial Institutions offer or market insurance/takaful products and/or services associated with the credit/financing product, Consumers must be informed in Writing that they have the choice to accept or reject the offer of insurance/takaful.
11. 2.1.3.14In addition to any other UAE regulator’s requirements regarding the sale and marketing of insurance/takaful, Licensed Financial Institutions must at a minimum:
    1. a.Explain the nature, purpose, coverage and limitations of coverage;
    2. b.Disclose its suitability for the Consumer;
    3. c.Disclose termination conditions including any obligations related to future insurance/takaful payments/ premiums; and
    4. d.Disclose the Fees (including associated commissions) paid with the sale of such an insurance/takaful product.

The Licensed Financial Institution must obtain the Consumer’s expressed consent for insurance/takaful independently of signing application forms or the contract for offering insurance/takaful. The appropriate Cooling-off Period will apply. This Section must be read in conjunction with the Section on Cooling-off Period of Article 5: Business Conduct of these Standards. Refer to Clause 2.1.1.31.

1. 2.1.3.15Where insurance/takaful coverage is a mandatory component of the Credit/Financing Product and/or Service, the Licensed Financial Institutions must disclose the purpose of the insurance/takaful. The Licensed Financial Institution must disclose the costs of the Licensed Financial Institution’s insurance/takaful product in Writing to the Consumer and inform the Consumer that the Consumer has the right to choose an insurance/takaful provider from minimum choice of 3 insurance/takaful providers approved by the Licensed Financial Institution. The Consumer should inform the Licensed Financial Institution of the choice of insurance/takaful provider within a reasonable period of time. If the Consumer does not inform Licensed Financial Institutions of the choice of a provider, the Licensed Financial Institution has the right to choose an insurance/takaful provider from the approved insurance/takaful providers presented to the Consumer.

The Licensed Financial Institution must also disclose to the Consumer if the insurance/takaful provider belongs to the same group of institutions as the Licensed Financial Institution.

1. 2.1.3.16If the Consumer decides to acquire insurance/takaful through the Licensed Financial Institution, the Consumer must be informed of any additional costs that may be incurred if the insurance/takaful costs are added to the loan/financing principal and thereby incurring the additional interest/profit costs.
2. 2.1.3.17When a Credit Product that is offered to a Consumer includes a balloon or deferred payment(s), or the option of a balloon or deferred payment, Licensed Financial Institutions must explain to the Consumer verbally and in Writing the concept of a balloon or deferred payment and the risks associated with the credit/financing product. Specifically before entering the contract, Licensed Financial Institutions must provide the Consumer with an explanation of the repayment/payment schedule and clearly outline the scheduling and amount of the balloon or deferred payments. The Consumer must acknowledge in Writing that this has been fully disclosed to him/her by the Licensed Financial Institution.
3. 2.1.3.18Licensed Financial Institutions must disclose to Consumers that a Credit Product cannot exceed its authorized limit or be allowed to draw on an overdraft facility and that any transaction resulting in the limit being exceeded may be rejected and may incur Fees.

During the Term of the Contract

1. 2.1.3.19Licensed Financial Institutions must, at minimum, on a quarterly basis for credit/financing facilities and at minimum on a monthly basis for credit / payment instruments, provide Consumers with a free statement of transactions (electronic or paper) which must include:
   1. a.Account Number/ID or Card Number/ID;
   2. b.Name(s) of Consumer(s);
   3. c.The date of the statement and the period covered by the statement;
   4. d.Next payment due date;
   5. e.The opening balance;
   6. f.Each transaction and the date of the transaction;
   7. g.The allocation of each payment between the outstanding balance and interest/profit payments (for loan/financing facilities);
   8. h.All interest/profit charged (for credit cards, Annual Interest/Profit Rate charged must be disclosed separately);
   9. i.All Fees transactions identified and totaled separately;
   10. j.Foreign exchange rate applied to each foreign exchange transaction (applicable to credit / payment card statements);
   11. k.The outstanding balance due;
   12. l.In case of balloon payments, the statement must clearly identify the balloon payment and future date due;
   13. m.In case of deferred payments, the statement must clearly identify the deferred amount and future date due;
   14. n.Details of the Annual Interest/Profit Rate applied during the period covered by the statement; and
   15. o.Information on how to file a Complaint with the Licensed Financial Institution which includes, at minimum, the contact details of the Licensed Financial Institution’s Complaint channels for reporting disputed transactions and lodging Complaints (e.g. by email, phone, fax etc.) and response time to address Complaints.
2. 2.1.3.20In addition to the above, a Credit Product statement for credit cards must also explain the cost that would be incurred if the Consumer does not make a full payment for the total amount outstanding by the payment due date by disclosing:
   1. a.The length of time it would take to fully settle the cardholder’s actual existing balance outstanding including the costs of total interest/profit if the Consumer only pays the minimum payment and there is no new transaction on the credit card during that period;
   2. b.The minimum payment amount that would be due; and
   3. c.The following warning statement:

1. 2.1.3.21Where any change in the Annual Interest/Profit Rate of a Credit Product is permitted, Licensed Financial Institutions must notify Consumers of the change. Where the rate change is an increase to the part of the Consumer’s interest/profit rate that is added to the variable Base Lending Rate/Financing Rate, the Licensed Financial Institution must not increase that part of the interest/profit rate until after the 30 calendar days’ notice period. This notification must include:
   1. a.The date from which the new rate will change;
   2. b.Details of the old and new rate;
   3. c.The details of the impact on the allocation of payments towards principle and interest/profit amount;
   4. d.If applicable, the revised repayment/payment amount; and
   5. e.The contact information for the unit in the Licensed Financial Institution that will respond to Consumers regarding the change and / or where the Consumer anticipates difficulties meeting any resulting higher repayments/payments.
2. 2.1.3.22Licensed Financial Institutions must ensure that a Consumer is immediately advised in Writing when a payment is missed for more than calendar 30 days past its due date.
3. 2.1.3.23When the Consumer is 2 payments in Arrears, the Licensed Financial Institution must advise the Consumer in Writing of the possible consequences of the Arrears as deemed appropriate by the Licensed Financial Institution, including:
   1. a.Legal action;
   2. b.Foreclosure;
   3. c.Redemption of security;
   4. d.Demand for payment from the guarantor; and
   5. e.Negative reporting with the Credit Information Agency.
4. 2.1.3.24Licensed Financial Institutions must disclose to Consumers the amount of late payment Fees and the dates they were incurred.
5. 2.1.3.25In the event of sale or transfer by a Licensed Financial Institution of a Consumer’s Credit Product to a Third Party, the Licensed Financial Institution must ensure that a Consumer is advised in Writing, 60 calendar days in advance of the sale or transfer and notified of the name of the Third Party unless otherwise instructed by the Central Bank.

Disclosures Requirements for Shari’ah Financing Products

1. 2.1.3.26IFIs which offer Shari’ah compliant financing products must comply with all the requirements in Section 2.1.3 of this Article, in addition to complying with the below requirements.
2. 2.1.3.27IFIs which offer Shari’ah compliant financing products to Consumers must:
   1. a.Explain briefly the Shari’ah concepts applicable to the financing product; and
   2. b.Indicate any takaful/insurance that is required as a condition of the financing product.
3. 2.1.3.28IFIs must comply with the specific early settlement disclosure requirements set by the Central Bank.