• Dr. Omran: supervising consumer credit activities increases investment, operating rates and improves competitiveness within the national economy
• Dr. Omran: More than 2 million citizens benefit from consumer credit activities that prompts us to set clear controls and sound professional rules so as to provide protection from harmful practices
Dr. Mohmmed Omran – FRA’s Chairman asserts that FRA’s BOD is keen on issuing the necessary executive decisions to put the provisions of Consumer Credit Law into effect immediately after obtaining the final approval of the law in the plenary session of the House of Representatives.
FRA’s Chairman says that the Law regulating consumer credit activities is one of the steps of FRA’s ambitious program to develop legislations regulating non-banking financial markets and instruments. He emphasizes that the said Law shall regulate providing finance to purchase goods and services for consumer purposes in Egypt. This came after discussing and approving the draft law in the House of Representatives yesterday.
Dr. Omran adds that the 2014 constitution obliges the Egyptian state to protect productive, service, and information economic activities as being essential components of the national economy. Also, he stresses that consumer credit activities practiced outside the banking sector and is not subjected to an integrated legal regulation. Besides, large part of the activity is practiced through informal mechanisms and customary practices and it lacks the regulatory framework and legislative foundations in a way that the state authorities are unable to protect consumers and the national economy has lost advantages of efficiency, fairness and stability in financing transactions.
FRA’s Chairman indicates that latest statistics show that number of consumer credit beneficiaries reach about 2 million borrowers, with a volume of consumer credit of about 70 billion pounds. Statistics show that 16 billion pounds go for equipment financing, 32 billion pounds to furniture financing and 16 billion pounds to financing new and used cars purchase. He points out that this is a huge volume if we know that the volume of bank lending in the year is estimated at 60 to 70 billion pounds.
Dr. Omran points out that including consumer credit activity under FRA’s supervision will result in multiple positive impacts at the level of the national economy. Consequently, investments and employment rates will be increased, competitiveness will be improved within the national economy. So , efficiency will be increased, prices will be decreased, domestic demand rates will be increased, in addition to creating a sound and accurate database that helps the state to adopt appropriate policies and allowing investors to take right investment decision.
On the other hand, major beneficiary of applying consumer credit law and creating real control over the activity is the simple citizen (consumer or borrower). The said Law grants clear controls and sound professional rules to be used upon providing loan. Besides, the Law provides a regulatory Authority that can review any complaints submitted in this regard, provides protection against harmful practices and eliminates manipulation.
Moreover, Dr. Omran expresses his appreciation to the joint committee that includes members of economic affairs committee and constitutional and legislative affairs committee at the House of Representatives and their contributions during reviewing and studying the draft law. He adds that during discussing provisions of Chapter Four entitled “control and consumers protection”, the committee introduces an article according to which the Authority shall receive complaints submitted by stakeholders from customers dealing with companies and consumer credit providers for violating the provisions of this law or the decisions issued in implementation thereof. The Authority shall respond to those complaints within a time not exceeding a month from the date of submitting the required documents. In addition, a decision shall be issued by FRA’s Chairman to organize procedures for filing and reviewing complaints and the way to notify the complainants.
FRA’s Chairman emphasizes that the draft law which includes five chapter with 32 articles regulates the relation between the customer and consumer credit providers. It obliges the latter to conclude a contract between them and their customers according to a form set by FRA. This contract shall include a number of points starting with identifying the promised goods and services and determining which of those goods and services are distinct. Also, the contract shall include a number of disclosures such as price of goods upon purchasing and the amount paid by the customer upon concluding the contract. In addition to, identifying financing amount provided by the company, payment period , number of installments and the value of each , rate of return taken as a basis for calculating financing value, and whether it is fixed or variable, without adherence to the limits stipulated in any other legislation. On the other hand, the contract shall stipulate guarantees obtained by the financing company, including preventing disposition until payment is made. Moreover, it shall include consumer’s approval to authorize financing company to disclose loan data to the Authority and the Egyptian Credit Bureau “I-Score”. Also, it shall include the company’s right to sell or deduct the debts owed to it.