Consumer Awareness Procedural Manual 2nd Section The Saudi Credit Bureau (SIMAH) has developed this procedural manual to publish it after the approval of Saudi Central Bank (SAMA). This Manual is intended to educate consumers about their rights guaranteed to them by the Credit Information Law and its Implementing Regulations. Copyright © 2021 SIMAH All Right Reserved nd 2 Section Content 1st Section 1.1 Introduction 1.2 Concepts 1.3 Definitions 1.4 Regulations 2nd Section 2.1 Saudi Credit Bureau 2.2 Tasks 2.3 Objectives 2.4 Credit Report 2.5 Office Hours 2.6 Supervision 3rd Section 3.1 Consumer Rights 3.2 Credit Principles 3.3 SIMAH Obligations 3.4 Member’s Obligations The Saudi Credit Bureau (SIMAH) has developed this procedural manual to publish it after the approval of Saudi Central Bank (SAMA). This Manual is intended to educate consumers about their rights guaranteed to them by the Credit Information Law and 4th Section its Implementing Regulations. 4 Complaints and Disputes Copyright © 2021 SIMAH All Right Reserved Consumer Awareness Procedural Manual 1.1 Introduction The Saudi Central Bank (SAMA) is the regulator, supervisor and licensor of the financial institutions to work in the Kingdom of Saudi Arabia (banks and finance companies including leasing, mortgage, insurance, money exchange companies and credit information). In this context, SAMA monitors and oversees the various products offered to customers by financial institutions under its supervision. Since the issuance of the its Article of Association in 1952 and Banking Control Law in 1966, SAMA has been working to protect the interests of the consumers and make sure that financial institutions deal with them with credibility and fair treatment. Many countries and international bodies such as the G-20, the Financial Stability Board (FSB) and the Organization for Economic Co-operation and Development (OECD) are considering amending and issuing new standards in the area of consumer protection. Due to the growth and development of the financial sector in Saudi Arabia, SAMA will continue reviewing these developments and issue appropriate regulatory directives to develop customer protection principles appropriately. SAMA aims at ensuring that the consumer who deals with the financial institutions is treated fairly, honestly and safely, and provided with all necessary tools to obtain financial services with ease and comfort. Among the most important rights are the credit rights which SAMA seeks to ensure to preserve in accordance with the Credit Information Law issued by the Council of Ministers and the Implanting Regulations. 4 1st Section 1.2 The Concept of Saudi Credit Bureau (SIMAH) Saudi Central Bank (SAMA) Regulation & Supervision Financial Institutions Paymnt Systems Credit Reporting (Banks, financial (SADAD, SAREEA) Bureau (SIMAH) Companies) This model demonstrates the importance of the credit information sharing and the role of SAMA in regulating and supervising the activities of SIMAH in Saudi market and to make sure they comply with the laws and regulations, such as Credit Information Law and Implanting Regulations. The credit infor- mation bureaus, payment systems firms and the intermediary financial systems are considered as the key elements in the financial infrastructure of any country. High quality of the financial infrastructure affects the growth and contribution of the private sector which ultimately will contribute the confi- dence of lenders and investors and enable them to assess and manage risks. The Saudi Credit Bureau (SIMAH) is considered to be an important pillar of the financial infrastructure in charge of providing necessary credit information to enable both borrowers and lenders alike. Having an excellent credit report doesn’t guarantee approval, because lenders still consider other factors like the consumer’s income and debt. However, a good credit report increases the consumer’s chances of being approved for new credit. Credit reports provided by SIMAH help lenders too in the decision-mak- ing process to improve the ability to analyze consumers’ credit risks and assess the solvency of the borrowers based on credit information. In addition, SIMAH’s data, demographic information, financial and non-financial information, helps to extrapolate the behavior of the consumer based on sophisticated mathematical models using these data to support the lending decision, and risk management. SIMAH big data, demographic information, financial and other variables available in credit reports help lenders to extrapolate the borrower›s credit behaviors based on complex mathematical models that use the variables and data of the credit report as key indispensable inputs to support lending decision and risk management 5 Consumer Awareness Procedural Manual 1.3 Definitions The Credit Information Law (CIL) issued by the Royal Decree No. M/37 The Law dated 05/07/1429H corresponding to 08/07/2008. Regulations The Implementing Regulations (IR) of the Credit Information Law. Central Bank Saudi Central Bank (SAMA). Credit Any consumer information or data related to his/her credit Information transactions. Saudi Credit A Saudi Credit information Bureau licensed to collect credit Bureau (SIMAH) information and save it to share it with its members. Any government or private entity which is party to a credit informa- Member tion exchange contract with at least one credit information bureau. Consumer Any natural or corporate person engaging in credit transactions. A report issued by credit bureaus containing consumer credit Credit Report information. Credit information records maintained by government entities such as records of funds and banks offering government loans, judicial au- Public Record thorities, government committees, bankruptcy and insolvency records and the like. Negative Any decision a member will take upon a consumer’s credit record decision against his/her interest. Negative Any information provided by a member based on the consumer’s Information credit report against his / her interest. The Committee Credit Information Dispute & Settlement Committee. 6 1st Section 1.4 Regulatory Framework The Credit Information Law was issued by the Royal Decree No. M/37 dated 5/7/1429H corresponding to 08/07/2008 upon the Resolution of Council of Ministers Bo. 188 dated in 4/7/1429H. This Law shall be applied to companies, members and government and private entities maintaining credit informa- tion in accordance with Article No. 3 of the Law. Implanting Regulations have also been issued ac- cording to the Central Bank’s Governor Resolution No. 1 s / 13709 dated 22/09/1432H corresponding 17/08/ 2011 as a complementary to the Law. In its Provisions (2,3,4) of Article 3, The Law has entrust- ed to the Central Bank the task of licensing, supervising, regulating and controlling credit bureaus. You can find the Law and Regulations on SIMAH website by visiting (SIMAH link to Laws + Regulations). 7 Consumer Awareness Procedural Manual 2.1 Saudi Credit Bureau (SIMAH) SIMAH was established on 2002 and started its operation on 14 April 2004 as a credit information bureau licensed to collect and maintain credit information on consumers and provide the same to members upon request. 2.2 Tasks SIMAH is tasked with collecting and maintaining credit information on consumers and providing the same to members upon request. 2.3 Objectives 1. Providing an effective financial infrastructure that can be relied on to ensure sustainable economic growth. 2. Contributing to sound financial infrastructure to ensure growth and contribution of the private sector so as to rise confidence of lenders and investors, decrease their uncertainties and improve their abilities to assess and manage risks. 3. Providing accurate credit information necessary to support borrower’s decision-making process to improve his/her ability in analyzing and evaluating the credit risk of the borrower’s solvency based on credit information. 4. Collecting and analyzing data, demographic information, financial and non-financial variables to help lending institutions and related parties in extrapolating borrowers’ behaviors based on sophisticated mathematical models using available data to support the lending decision and risk management. 5. Reducing credit information asymmetries ; whereas information disparities between the lender and the borrower often lead to a high risk of lending and a high cost of borrowing due to the lending decision taken primarily based on the accuracy of the credit information. 6. Reducing the loan default rates, increasing collection ratios, as well as facilitating accessibility to finance at a cost that is risk- based pricing with great accuracy. 7. Supporting the monetary policy and its instruments. Lenders’ ability to price risk in a dynamic, accurate and differentiated manner according to the likelihood of a borrower’s defaulting allows one of the most important monetary policy instruments ; namely interest rates, to directly affect economic behaviour such as borrowing, investment and consumption rates. 8. Uplifting credit quality and credit expansion to stimulate economic growth. 8 2nd Section 2.4 Credit Report The Saudi Credit Bureau (SIMAH), in the process of evaluating consumers’ creditworthiness and by providing credit reports, does not provide any opinion, decision and/or comment that would oblige any member to grant or deny any credit facilities. On this basis, SIMAH has, since its foundation, inserted the following statement in each credit report issued “This information has been