Disclosure of key terms
CM-8.5.1
Licensees must make clear to potential borrowers, prior to entering into a consumer finance agreement, all relevant key terms of the agreement.
CM-8.5.2
These terms should be summarised in plain English and Arabic in a short "key terms disclosure" document; this document must be signed and dated by borrowers (in duplicate) as having been read and understood, prior to signing a consumer finance agreement. One copy should be retained by the borrower and the other must be retained by the licensee in their customer file.
CM-8.5.3
The "key terms disclosure" document must, amongst other things, make clear:
(a) the amount being borrowed or the credit limit being offered, its maturity and repayment schedules;(b) the nominal rate of interest to be charged on the consumer loan/facility;(c) whether this rate of interest is fixed or can go up and / or down, and under what circumstances;(d) the basis on which interest is charged and when capital repayments are taken into account in the calculation, together with an illustration of the calculation method;(e) a breakdown of all non-interest costs not included in (b), (c) and (d) above and associated with the loan or facility, such as arrangement fees, documentation fees, late payment fees, and obligatory payment protection insurance costs;(f) the full costs associated with top-ups of instalment loans or early repayments of amounts due including the treatment of remaining interest and the payment of premium for insurance; and(g) the Annual Percentage Rate, as defined in paragraph CM-8.5.5 below.CM-8.5.4
Licensees are free to design the layout and wording to be used in their "key terms disclosure" document, as they see fit, providing they contain the information specified in paragraph CM-8.5.3 above. The BMA will monitor compliance with the spirit as well as the letter of the requirements in this chapter. If necessary, the BMA will consider prescribing a standard template to be used by all licensees engaged in consumer finance.
