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7.1.3 Consumer Assessment for Suitability

C 8/2020 STA Effective from 25/12/2020
  1. 7.1.3.1Staff of Licensed Financial Institutions responsible for assessing suitability and granting credit to Consumers must be qualified for the level of credit granting authority that the Person is authorized to give.
  2. 7.1.3.2Suitability is defined as the degree to which the Financial Product and/or Service offered by the Licensed Financial Institution matches the Consumer’s financial situation, investment objectives, level of risk tolerance, financial need, knowledge and experience.
  3. 7.1.3.3Where a Licensed Financial Institution is required to carry out an assessment of a Consumer regarding the suitability, affordability and/or appropriateness of a Credit Product and/or Service, a summary copy of the assessment must be provided to the Consumer without charge.
  4. 7.1.3.4The Licensed Financial Institutions’ Consumer assessment control framework must include:
    1. a.Methods for assessing the profile and circumstances of the Consumer for which a Credit product would be suitable; and
    2. b.Clear lines of authority for approving the offer of a Credit Product and/or Service to a Consumer and the parameters for allowing exceptions from the assessment policy, procedures and established criteria. The basis for the approval or exceptions should be properly documented and supported with information relevant to the decision. Such approvals or exceptions should be subject to independent reviews by appropriate Control functions of the Licensed Financial Institution to ensure that they do not undermine the Consumer assessment procedures that are in place.
  5. 7.1.3.5When providing a Credit Product, Licensed Financial Institutions must:
    1. a.Assess the purpose of the credit/financing and the appropriate amount required;
    2. b.Verify personal information, employment income and any other sources of regular income and revenue;
    3. c.Assess the status of the Consumer’s credit worthiness including verifying information with the Credit Information Agency;
    4. d.Provide General Advice on the appropriateness of the lending/financing request and provide any other reasonable options that the Consumer may or should consider; and
    5. e.Not issue or bundle a credit card with the Credit Product or automatically increase a credit card limit, except upon expressed consent of the Consumer.
      1. Licensed Financial Institutions may offer a Consumer an increase in the limit of an existing credit card but must comply with the following:
      2. i.Must perform a new check with the Al Etihad Credit Bureau for an updated credit history of the Consumer; and
      3. ii.Must obtain expressed consent of the Consumer before applying the increase in credit/financing to the card.
  6. 7.1.3.6Licensed Financial Institutions may decrease the credit limit on a card or close the card due to business reasons; Consumers must be provided a notice and the reason for limit decrease or closure.
  7. 7.1.3.7If a Licensed Financial Institution engages in bundling of products and/or services with a Credit Product of any kind, it must provide the Consumer with the option to refuse the other bundled product(s) and retain the right to obtain the amount of credit based on the original offer from the Licensed Financial Institution. Offering Shari’ah compliant products and/or services must comply with the relevant Shari’ah requirements. The Licensed Financial Institution must disclose, in Writing, and explain the benefits of accepting a bundled product. As an exception, where credit insurance/takaful is a requirement of a proposed Credit Product, the Consumer must be informed in Writing that the Consumer must obtain the insurance/takaful from regulated companies proposed by the Licensed Financial Institution.