Aggregated News From Investment Management Regulators

FRA welcomes the issuance of Law No. 18 of 2020 to regulate consumer credit activities – Saturday 21/3/2020


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• Dr. Omran: Consumer Credit Law doubles local purchasing power and enables payment in installments that commensurate with consumers’ income.  In addition, it increases investment and operating rates

• Dr. Omran: Provisions of Consumer Credit law – perfectly- apply financial consumer protection principles approved by the Authority

• Dr. Omran: Consumer Credit Law stipulates that FRA shall approve the establishment of consumer credit firms and licensing them

Dr. Mohammed Omran – FRA’s Chairman welcomes the issuance of Law No. 18 of 2020 to regulate consumer credit activities – in a manner that aims to increase local purchasing power. He confirmed that FRA’s BOD will successively issue the rules and executive procedures necessary to implement the provisions of the said law. On the other hand , FRA’s Chairman urged companies currently existing and operating in consumer credit activity to quickly reconcile their conditions. Also, he called upon those wishing to establish new consumer credit firms to submit a request to the Central Department of Incorporation and Licensing to take action to establish the new companies and to be listed at FRA’s registry in implementation of the provisions of Consumer Credit Law.

FRA’s Chairman stated that the said Law regulates the establishment of consumer credit firms which offer financing to consumers in order to purchase goods and services in installments that commensurate with their income. The Law assigned their establishment and licensing to the Authority.

Dr. Omran said that subjecting the consumer credit activity to the authority’s control has many advantages at the level of the national economy as it will increase the volume of investments and employment rates in productive and service projects. Also, it will increase rates of domestic demand by increasing local purchasing power and allow payment in instalments that suit incomes. On the other hand, consumer credit activity  improves competitiveness within the national economy and leads to prices reduction. Also, the said Law shall form a sound and accurate database that helps the state to adopt appropriate policies and provides investors the ability to make an investment decision.

Dr. Omran noted that the Law allows these companies to issue commercial cards that consumers shall use in purchasing goods and services through a network of vendors that conclude an agreement with consumer credit firm. Among the goods and services that consumer credit firms will make available for purchase are primarily vehicles and passenger cars of all kinds, durable goods, including electrical and electronic devices, educational services, medical services, travel and tourism services and any other  goods or services approved by FRA’s BOD .

Articles of the Law also included the activation of producers and distributors of goods in the field of retail sale which works in the field of producing or distributing vehicles and passenger cars of all kinds and durable goods. It allows consumers to purchase goods in installments at agreed deadlines. Also, it enables citizens of low and middle income to obtain their needs and pay their value in installments for several years. In addition, the said legislation obliges them to be listed at FRA’s registry and to obtain a license to practice the activity. Moreover, Producers and distributors of goods whose installment sale is not less than 25 million EGP annually shall be subjected to the said law.

Dr. Omran stressed the law’s keenness to protect consumers by requiring consumer credit firms and consumer credit providers from producers and commodity distributors to maintain complete confidentiality for their customers and not to divulge any information about them or their transactions to others. He also obligated them to marketing and advertising controls issued by the Authority and among the most important How to calculate and determine cost of credit.

Dr.  Omran indicates that Consumer Credit Law represents an actual application of financial consumer protection principles. He emphasized that the Law obligated consumer credit firms, producers and distributors of goods licensed to engage in consumer credit activity to conclude a contract between them and their clients according to the form prepared by the Authority. The contract shall provide consumers with full disclosure of all information including determining the type of goods and services, purchase  price ,the amount to be paid by the consumer upon  concluding the contract, payment period , number of installments and the value of each , rate of return, whether this price is fixed or variable , the consumer’s right to expedite fulfillment and conditions associated with it.

FRA’s Chairman also welcomes the establishment of a Union which will include all consumer credit entities. The Union will provide recommendations on developing this activity , raising awareness of it, expressing opinion on legislations and regulations governing consumer credit activity and developing the skills of those operating in this field.

In Chapter Four of its provisions, the Law assigned the task of raising awareness of consumer credit activity to FRA. In this respect, FRA shall spread awareness, protect consumer and maintain a competitive climate.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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