BC BC Business and Market Conduct
BC-A BC-A Introduction
BC-B BC-B Provision of Financial Services on a Non-discriminatory Basis
BC-B.1 BC-B.1 Provision of Financial Services on a Non-discriminatory Basis
BC-B.1.1
Conventional Bank Licensees must ensure that all regulated financial services are provided without any discrimination based on gender, nationality, origin, language, faith, religion, physical ability or social standing.Added: October 2020BC-A.1 BC-A.1 Purpose
BC-A.1.1
This Module contains requirements that have to be met by
conventional bank licensees with regards to their dealings withcustomers. The Rules contained in this Module aim to ensure thatconventional bank licensees deal with theirclients in a fair and open manner, and address theircustomers ' information needs.October 07BC-A.1.2
The Rules build upon several of the Principles of Business (see Module PB (Principles of Business)). Principle 1 (Integrity) requires
conventional bank licensees to observe high standards of integrity and fair dealing, and to be honest and straightforward in their dealings withcustomers . Principle 3 (Due skill, care and diligence) requiresconventional bank licensee s to act with due skill, care and diligence when acting on behalf of theircustomers . Principle 7 (Client Interests) requiresconventional bank licensees to pay due regard to the legitimate interests and information needs of theircustomers , and to communicate with them in a fair and transparent manner.October 07BC-A.1.3
This Module also provides support for certain aspects relating to business and market conduct in the Bahrain Commercial Companies Law of 2001 (as amended).
October 07Legal Basis
BC-A.1.4
This Module contains the Central Bank of Bahrain's ('CBB') Directive (as amended from time to time) on business conduct by
conventional bank licensees , and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 (CBB Law). The directive in this Module is applicable to allconventional bank licensees .Amended: January 2011
October 07BC-A.1.5
For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.
October 07BC-A.2 BC-A.2 Scope of Application and Key Requirements
BC-A.2.1
This Module applies to all conventional bank licensees unless indicated otherwise. The provisions of this Module do not apply to overseas branches and subsidiaries unless clearly stated otherwise.
October 07BC-A.2.2
The remainder of this Module covers the following activities by
conventional bank licensees :(a) Promotion of financial products and services (Chapter BC-1);(b) Code of Conduct for bank dealers and foreign exchange dealers (Chapter BC-2);(c) Client confidentiality (Chapter BC-3);(d) Customer account services and charges (Chapter BC-4);(e) Dishonoured cheques (Chapter BC-5);(f) ATMs and charges for their use (Chapter BC-6);(g) Margin Trading system (Chapter BC-7);(h) Investment Business related activities (Chapter BC-8);(i) Customer Complaints Procedures (Chapter BC-9); and(j) Measures and Procedures for Services Provided to Disabled Customers by Bahraini Retail Banks (Chapter BC-10).Amended: April 2016
Amended: October 2011
Amended: January 2011
Amended: April 2008
October 07BC-A.3 BC-A.3 Module History
BC-A.3.1
This Module was first issued in July 2004 by the BMA, as part of the conventional principles volume. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.
October 07BC-A.3.2
When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 1 was updated in October 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.
October 07BC-A.3.3
The most recent changes to this Module are detailed in the table below:
Summary of Changes
Module Ref. Change Date Description of Changes BC-4.1 01/01/05 New minimum balance and charges regulations. BC-4.7 01/10/05 Streamlined notification requirements regarding new products. BC-7 01/04/06 Margin trading rules and guidance. BC-A.1 10/2007 New Rule BC-A.1.4 introduced, categorising this Module as a Directive. BC-8 04/2008 New conduct of business requirements for Investment Business BC-4.9 04/2008 New requirement to comply with Code of Best Practice on Consumer Credit and Charging. BC-7.2 07/2009 Removal of numerical restrictions related to margin trading requirement. BC-8.5.17 10/2010 Clarified the wording of Rule by replacing the term "legal" with "licensing". BC-A.1.4 01/2011 Clarified legal basis. BC-1.1.13 01/2011 Corrected reference to Ministry of Industry and Commerce. BC-8 01/2011 Changes made to reflect new definitions related to licensed exchange(s). BC-1.1.11 04/2011 Clarified retention period of records for promotional schemes. BC-3.1.1 and BC-4.3.1 04/2011 Minor amendments to clarify Rules. BC-A.2.2 10/2011 Added new Section to list of activities covered by this Module. BC-4.7.3 10/2011 Deleted Paragraph. Reduced notification requirements on new or expanded products and facilities. BC-4.8.2 10/2011 Updated name of Ministry of Justice and Islamic Affairs. BC-4.10 10/2011 Added new Section on transaction advice. BC-8.11 and BC-9 10/2011 Replaced Section BC-8.11 dealing with complaints and added Chapter BC-9 Customer Complaints Procedures in line with results of consultation and made it applicable to all regulated banking services. BC-9 01/2012 Minor corrections to correct typos and clarify language. BC-9.3.9 01/2012 Paragraph deleted as it repeats what is in Paragraph BC-9.3.7. BC-6.1.6 04/2012 Cross reference added. BC-6.1.10 and BC-6.1.11 04/2012 Rule clarified and split into one Rule and one Guidance Paragraphs. BC-8.2.1 04/2012 Corrected cross reference. BC-1.2 07/2012 Added Section on Advertisements for retail banking products and services BC-4.3 07/2012 Corrected cross reference. BC-8.5.12A 07/2012 Added guidance to clarify promotion material from banks. BC-9.1.3A 07/2012 Added guidance on the appointment of the customer complaints officer. BC-1.1.2 10/2012 Added cross reference to advertising requirements under Section BC-1.2. BC-4.3 10/2012 Section amended to reflect outcome of consultation on disclosure of interest/profit rate fees and charges by retail banks. BC-4.8 10/2012 Amended to make Rules clearer. BC-6.1.2 10/2012 Clarified process for applications for the installation of off-site ATMs. BC-4.4 01/2013 This Section was deleted and requirements are now covered under Section FC-1.6. BC-1.2.2 04/2013 Corrected cross reference. BC-4.3.2 04/2013 Clarified Rule on instances when customers must be kept informed of charges. BC-8.9.14 and BC-8.9.16(e)(v) 04/2013 Clarified Rules on allocations. BC-9.7 07/2013 Additional details provided on reporting of complaints. BC-4.2.15 10/2013 Corrected cross-reference. BC-5.3 10/2013 Updated penalty charges on dishonoured cheques. BC-6.3 01/2014 Added new Section on local ATM network charges. BC-4.11 04/2014 Added new Section on donations to NGO accounts. BC-4.12 10/2015 Added new Section on credit check reports. BC-A.2.2, and BC-10 04/2016 Added new Section on Measures and Procedures for Services Provided to Disabled Customers by Bahraini retail banks. BC-6.3 04/2016 Amendment to local ATM charges. BC-6.1.6 07/2016 Deleted reference to Ministry of Interior. BC-4.7 10/2016 Clarified Rules on notification for new or changes to customer products and facilities. BC-4.10.1 10/2016 Amendment to Transaction Advice BC-4.10.2 10/2016 Deleted Paragraph BC-7.2.5 10/2016 Rectified term 'Credit Reference Bureau' BC-5A 01/2017 Added new Section on Return Policy – Post-Dated Cheques BC-10.1, BC-10.2 and BC-10.3 04/2017 Amended Paragraphs to clarify applicability of Rules. BC-5.3.1 07/2017 Amended Paragraph to include penalty charges on returned cheques for the reason of Insufficient Funds. BC-4.1 04/2018 Deleted Section on "Minimum Balance and Charges on Savings Accounts". BC-4.13 04/2018 Added new Section on "Fees and Charges for Services Provided to Individuals". BC-5.3.2 04/2018 Deleted Paragraph on "Dishonoured Cheques". BC-6.2 04/2018 Deleted Section on "GCC ATM Network Charges". BC-6.3 04/2018 Deleted Section on "Local ATM Network Charges". BC-4.14 10/2018 Added a new Section on Fees and Charges for Services Provided to Companies under Formation. BC-11 10/2018 Added a new Chapter on Financial Advice Programme. BC-4.3.22 01/2019 Amended Paragraph on disclosure of charges by retail banks. BC-4.3.24 01/2019 Amended Paragraph on disclosure to individual customers. BC-4.3.25A 01/2019 Added a new Paragraph on rounding off in transactions. BC-4.13.2 01/2019 Added a new Paragraph on waived fees and charges. BC-4.15 07/2019 Added a new Section on Interest on Credit Card Transactions. BC-4.16 10/2019 Added a new Section on Interest on Credit Facilities. BC-6.1 10/2019 Deleted Section. BC-10.2.2 01/2020 Amended Paragraph. BC-4.17 04/2020 Added a new Section on Blocking Customer Accounts. BC-9.3.15 04/2020 Amended Paragraph adding reference to CBB consumer protection. 04/2020 Amended Paragraph adding reference to CBB consumer protection. BC-9.7.1 - BC-9.7.3 04/2020 Amended Paragraph adding reference to CBB consumer protection. BC-B 10/2020 Added a new Chapter on Provision of Financial Services on a Non-discriminatory Basis. BC-4.18 10/2020 Added a new Section on Fund Transfers by Customers of Payment Service Providers (PSP). BC-4.19 04/2021 Added a new Section on ‘Merchant Fees on Payments to Zakat and Charity Fund’. BC-1.2.1 07/2021 Deleted Paragraph. BC-1.2.2 07/2021 Deleted Paragraph. BC-4.3.6 07/2021 Amended Paragraph. BC-1.1 01/2022 Added new enhanced Section on Promotions. BC-1.2 01/2022 Added new enhanced Section on Advertisements. BC-4.20 01/2022 Added a new Section on Dormant Accounts and Unclaimed Balances. BC-11.1.3 01/2022 Deleted Paragraph. BC-2.8.2 04/2022 Deleted Subparagraph (b). BC-4.20.7 07/2022 Amended Paragraph on dormant accounts activity. BC-11.1.1 07/2022 Amended Paragraph on the Financial Advice Program (FAP). BC-4.21 01/2024 Added a new Section on Insurance cover on loans. Effective Date and Evolution of the Module
BC-A.3.4
Prior to the Rulebook, the CBB had issued various circulars representing regulations covering different aspects of Business and Market Conduct. The contents of this Module are effective from the date depicted in the original circulars listed below or from the dates indicated in Paragraph BC-A.3.3 above:
Circular Ref. Date of Issue Module Ref. Circular Subject EDBC/73/96 1 May 1996 BC-1.1 Explanatory note on the promotion of Banking and Financial Products. BS.C7/91/442 10 Sep 1991 BC-1.1 Promotion of Banking Services. 85/25 2 May 1985 BC-2 Code of Conduct for Foreign Exchange Dealers and Brokers. 83/5 10 Apr 1983 BC-3 Disclosure of Information about Individual Accounts. BS/11/2004 10 Aug 2004 BC-4.1 Min balances and savings accounts. BS.C7/90/34 31 Jan 1990 BC-4.2 Dinar Certificates of Deposits. EDBO/51/02 2 Apr 2002 BC-4.3 Charges to Customers. BC/5/00 8 Mar 2000 BC-4.4 Accounts held for Clubs and Societies. BSD(111)/94/157 24 Sep 1994 BC-4.5 Fees on Current Accounts. BC/2/01 3 Mar 2001 BC-4.6 Brokerage Fees in Bahrain. ODG/145/92 18 Aug 1992 BC-4.7 New products in the Retail Banking Field. EDBO/46/03 8 Apr 2003 BC-4.8 Inheritance — Financial Procedures. EDBO/27/96 25 Sep 1996 BC-5.1 Regulation for "Dishonoured Cheques". OG/399/94 28 Nov 1994 BC-5.2 Returned Cheques. EDBO/49/01 6 May 2001 BC-5.3 Penalty Charges on Returned Cheques. BC/8/98 24 May 1998 BC-6.1 Off-site ATMs. EDBO/45/02 13 Mar 2002 BC-6.2 GCC ATM Network Charges. BC/15/99 17 Jul 1999 BC-7.1 Margin Trading. EDBS/KH/C/73/2018 22 Nov 2018 BC-4.3.25A Rounding off in Transactions. Amended: January 2019
Amended: October 2010
October 07BC-1 BC-1 Promotion of Financial Products and Services
BC-1.1 BC-1.1 Promotions
Introduction
BC-1.1.1
The purpose of the content of this Section is to set out requirements pertaining to the promotion of financial services and products offered in/from Bahrain by
conventional retail bank licensees . For the purposes of this Section, promotions mean all types of promotional campaigns, competitions, merchant discount schemes/loyalty programmes or other schemes of similar nature offered to customers or prospective customers by means of incentives etc.Amended: January 2022
Added: October 07BC-1.1.2
Conventional retail bank licensees must ensure that all the following requirements are met with regards to promotion of products or services:(a) They do not involve a breach of Bahrain law or any other relevant applicable law or regulation;(b) All documentation concerning promotions is in a language necessary for customers to fully understand and appreciate the products or services;(c) Customers to whom promotions are directed must enjoy equal opportunity in terms of access to, and treatment within such schemes;(d) The communication concerning promotions must be clear, concise, truthful, unambiguous and complete to enable customers to make a fully informed decision; and(e) Where the promotion involves communication of earnings potential or benefits associated with the products or services promoted, all costs, charges or levies and risks are also disclosed.Amended: January 2022
Amended: October 2012
Amended: January 2011
Added: October 07BC-1.1.3
Licensees using character-limited media (e.g. social media platforms such as Instagram, Facebook etc.) as a means of promoting complex features of financial products or services should provide a reference or link to more comprehensive information available elsewhere.Amended: January 2022
Amended: January 2011
Added: October 07BC-1.1.4
Conventional retail bank licensees must ensure that the following requirements are met with regards to raffles/lotteries:(a) Adequate systems and documented procedures are in place that describe the checks and balances to ensure fair play, impartiality and the inclusion of eligible participants as well as for informing participants of the results of a raffle/lottery without delay;(b) They are subject to the rules and requirements (including prior authorisation/approval) laid down by the Ministry of Industry, Commerce and Tourism;(c) The raffle draw date of the announced prize/incentive/campaign is disclosed in advance to the public and that other subsequent announced prize/incentive/campaign follow the same approach. Raffle dates must not be postponed unless a valid reason is stated/indicated;(d) The winner(s) report includes the winner's name, CPR number, mobile number and the number of chances (e.g. tickets/ certificates) in the draw;(e) Each draw of the raffle/lottery held as part of the bank’s promotional scheme is independently verified and monitored/witnessed by the bank’s internal auditor and, additionally, draws involving prizes of BD 10,000 or above in aggregate must be independently verified and monitored/witnessed by the bank’s external auditors;(f) An annual check and a comprehensive audit on the “raffle draw” system is conducted by the external IT auditor. In addition, a detailed report in this regard from such auditor must be submitted to the CBB within 3 months from year-end and a copy is sent to the consumer protection department in the Ministry of Industry, Commerce and Tourism; and(g) The internal auditor periodically reviews, at least annually, all promotions, raffles/lotteries in addition to the systems, procedures, processes and related operational risks.Amended: January 2022
Amended: April 2008
Added: October 07General Requirements
BC-1.1.5
The requirements of Paragraph BC-1.1.4 do not apply to promotions or giveaways generally offered and selected through draws to customers on an ad hoc basis (at no cost to the customer, implicit or otherwise). In such cases, there is no direct link between the acquisition of the products or services by the customers and the periodic raffle draw/lotteries.
Amended: January 2022
Amended: April 2011
Added: April 08BC-1.1.6
While there is to be no formal restriction on the types of incentive which may be used by institutions, care should be taken to ensure that promotional schemes do not negatively affect the integrity, reputation, good image and standing of Bahrain and/or its financial sector, and do not detrimentally affect Bahrain's economy.
Amended: April 08
October 07BC-1.1.7
Bearing in mind the reputation of, and the requirement to develop, the financial sector in Bahrain, as well as the need to act at all times in the best interests of the customer, banks need to take adequate care to ensure that promotional schemes do not unreasonably divert the attention of the public from other important considerations in choosing a bank or a banking/financial product.
Amended: April 08
October 07BC-1.1.8
All documentation concerning promotional schemes should be in Arabic and English and, if relevant, any other language necessary for customers to fully understand and appreciate their terms and conditions. Such terms and conditions, including any related advertising, need to be clear, concise, truthful, unambiguous and complete so as to enable customers to make a fully informed decision.
Amended: April 08
October 07BC-1.1.9
Customers to whom promotional schemes are directed should enjoy equal opportunity in terms of access to, and treatment within, such schemes.
Amended: April 08
October 07BC-1.1.10
No costs (including funding costs), charges or levies associated with promotional schemes should be concealed from prospective customers.
Amended: April 08
October 07BC-1.1.11
All material related to promotional schemes, particularly where raffles/lotteries etc. are concerned, must be maintained for a minimum period of 5 years (see Paragraph OM-7.3.4).
Amended: April 2011
Amended: April 08
October 07BC-1.1.12
Any raffles/lotteries etc. held as part of promotional schemes should be independently monitored (e.g. by the institution's external auditor) and adequate systems put in place to ensure fair play and impartiality.
Amended: April 08
October 07BC-1.1.13
An appropriate system must also exist for informing participants of the results of a raffle/lottery without delay. Institutions must note that raffles/lotteries etc. may be subject to rules and requirements (including prior authorisation/approval) laid down by the Ministry of Industry and Commerce.
Amended: April 2011
Amended: January 2011
Amended: April 08
October 07BC-1.1.14
Banks may use small 'gifts' as an inducement to members of the public to use banks' services, provided such gifts are offered on a general basis and have a low monetary value.
Amended: April 08
October 07BC-1.1.15
Due note should be taken of the overriding provisions of Bahrain (and any other relevant) law in relation to institutions' duties to customers to the extent (if any) that promotional schemes might impact on such duties.
Amended: January 2011
Amended: April 08
October 07BC-1.2 BC-1.2 Advertisements
BC-1.2.1
Conventional retail bank licensees must allow a means for customers to opt-out from receiving promotional or advertisement material through email, SMS, WhatsApp or other communication means should such customers want to opt-out. The opt-out can be in writing or electronically.Amended: January 2022
Deleted: July 2021
Added: July 2012BC-1.2.2
The CBB may, at its discretion, require the
licensee to withdraw the advertisement or any material thereof, if it believes that the advertisement is not compliant with the requirements of this Module or that it has a negative impact on the financial sector or on the society.Amended: January 2022
Deleted: July 2021
Amended: April 2013
Added: July 2012BC-1.2.3
Conventional retail bank licensees must ensure thatadvertisements :a) Are clear, fair, accurate and not misleading;b) Are simple to understand and presented in a way that is likely to be understood by the average person to whom it is directed;c) Clearly state what the letters stand for if acronyms are used (for e.g. APR);d) Font size for all advertisements must be clear and readable, including footnotes;e) Terms and conditions are easily accessible by customers;f) Any concessionary offer/promotion in anadvertisement contains the validity period of such offer/promotion;g) Clearly present any comparison or contrast (if any) in a fair and balanced way. Such comparison or contrast must be meaningful and presented in general terms, i.e. banks must avoid making direct comparisons of their products with those of their competitors;h) Are publicly announced by thelicensee only;i) Clearly state the name of the bank, bank logo, and contact details;j) The name of the product and its details are clear to the customers;k) Include a proper link to the terms and conditions including fees and charges;l) Include a statement that the bank is licensed by CBB as aconventional retail bank licensee ; andm) Do not make use of the name of CBB in anyadvertisement in such a way that would indicate endorsement or approval of its products or services.Added: January 2022BC-1.2.4
Conventional retail bank licensees must ensure thatadvertisements do not:a) Include the expression ‘interest free’ or any similar expression when there is implicit interest embedded in the product or service;b) Include the descriptions of product or service as ‘free’ or ‘with no cost’ or any similar expression if any type of fee would be imposed;c) Include the descriptions of feature of a product or service as ‘guaranteed’ or ‘secured’ or use a similar expression unless the bank communicates all the necessary information, and present that information with sufficient clarity and prominence to make the use of that term fair, clear and not misleading;d) Contain any statement such as “the best in”, “the most competitive”, “the best rate in”, “the first in”, ‘the highest’ or ‘the lowest’ or ‘the best’ in the market unless it is fully supported by evidential documents;e) Emphasise any potential benefits of a product or service without also giving a fair and prominent indication of any relevant risks; andf) Disguise, omit, diminish or obscure important information, statements or warnings.Added: January 2022Digital Advertisements
BC-1.2.5
Conventional retail bank licensees must ensure that each digitaladvertisement through the internet/social media (e.g. Twitter, Instagram, WhatsApp, Facebook, web page, etc.) complies with the requirements in this Section.Added: January 2022BC-1.2.6
Where a
licensee publishes customer feedback/review on the internet/social media, it must display both positive and negative feedback/review.Added: January 2022BC-2 BC-2 Code of Conduct for Bank Dealers and Foreign Exchange and Money Brokers in the Foreign Currency and Deposit Markets
BC-2.1 BC-2.1 Introduction
BC-2.1.1
The Code of Conduct, which is prepared in cooperation with the Bankers' Society of Bahrain and foreign exchange brokers, provides rules in respect of certain kinds of practice which experience has shown may cause difficulty and may jeopardise the good standing of the Bahrain market. Management of banks and money brokers are responsible for ensuring that their institutions are in full compliance with the Code.
October 07BC-2.1.2
Every broker and dealer shall at all times comply with the criteria in respect to market practice, integrity and conduct. Failure to comply with such criteria will be regarded as a serious offence by the CBB, which reserves the right to investigate any complaints brought to its attention. All participants should adhere to the spirit as well as to the letter of the Code.
October 07BC-2.2 BC-2.2 Market Terminology and Definitions
BC-2.2.1
The use of generally accepted precise terminology should reduce misunderstandings and frustration, and to this end Appendix BC-5 sets out, without claiming to be exhaustive, accepted market terminology and definitions.
October 07BC-2.2.2
For the purpose of this Chapter, the following definitions apply:
(a) 'Broker' means a money and foreign exchange broker who is authorised by the CBB to operate in Bahrain;(b) 'Principal' means a party undertaking a transaction through a broker; and(c) 'Bank' means any institution holding a banking license.Amended: April 2011
October 07BC-2.3 BC-2.3 Confidentiality and Market Practice
BC-2.3.1
Confidentiality is vital for the preservation of a reputable and efficient market. Accordingly, the exchange of confidential information in respect of third parties is forbidden.
October 07BC-2.3.2
The rules which follow are not intended to define exhaustively the obligations of dealers and brokers but set down specific ways in which confidentiality should be safeguarded and operations should be conducted:
(a) Use of phrases and terms likely to identify the name of the principal should be avoided at all times;(b) In foreign exchange transactions brokers should not disclose the name of the principal until the deal is being closed.
A broker asking for a specific support price should be prepared to qualify the principal in terms of geographical location, by country or by region when the broker genuinely believes it will enable business to be concluded satisfactorily to the benefit of both broker and principal;(c) Indeposit transactions, brokers should not disclose the name of the borrower until the broker is satisfied that the potential lender seriously intends to do business. Once a lender has asked for the identity of the borrower ('Who pays?'), the lender is committed to do business at the rate quoted with an acceptable name, until the lending bank takes the broker 'off' or puts himself under reference. In the event of the first disclosed name being unacceptable to the lender, the lender will be prepared to check other acceptable names provided that such names are shown to the lender by the broker within a reasonable amount of time, which should be stipulated if necessary;(d) In the deposit market, banks should whenever possible give brokers prior indication of those categories of principals and of any centres and areas with which they would be unwilling to do business, in order that the smooth operation of markets be facilitated and frustration be minimized. Lenders should indicate the amounts they are prepared to place with particular categories of borrower. Brokers should classify bids with an indication of the type and quality of names they are in a position to pass;(e) Practices whereby banks reject a succession of names in order to assess the market and brokers offer banks deals which have no chance of being concluded, merely in order to establish their interest, are totally unacceptable;(f) A principal is urged whenever possible to specify to a broker the rate, the amount, the currency, and the period of his requirements. The principal shall be willing to deal in a marketable amount with acceptable names and shall remain bound so to deal at the quoted rate unless either:(i) The broker is informed otherwise at the time of acceptance; or(ii) A time limit was placed (for example, 'Firm for one minute only').A broker who quotes a firm rate without qualification shall be prepared to deal at the rate, in a marketable amount. A broker, if quoting only the basis of one or two names, shall qualify his quotation, e.g., 'one small offeror – only two names paying'. The broker should indicate whether prices are firm or simply for guidance and, if requested by the principal, should be willing to indicate the amount involved. Further he should confirm with banks at reasonable intervals that their interest is still firm.
It is the responsibility of the principal to ensure the broker is made aware of any circumstances which materially affect the validity of the order placed with the broker.(g) A principal, by selecting to 'put a broker on', is deemed to have a serious intention of completing business, and should allow the broker sufficient time to quote the principal's interest to a potentialcounterparty with a view to doing business. In quantifying a 'sufficient time' factors such as the currency, market conditions and communication systems employed, should be taken into account;(h) A broker is held responsible for advising a principal on every occasion that hisdeposit rates are being checked by a potentialcounterparty . This action should help minimise the occasional difficulties that arise when a principal 'takes a broker off' simultaneously to having his prices checked.
Whenever possible and subject to market conditions, a bank in the deposit market should, before he 'takes a broker off' either a single order or several orders, check whether the broker is already committed to deal on his behalf;(i) 'Under reference' orders placed by banks with brokers without having first being placed as 'firm', are to be discouraged. Firm orders which are later qualified by a request to 'put me under reference' indicate a principal's weakening desire to conclude business with that broker. 'Under reference' orders should not be left with a broker for more than a few minutes. A principal must ensure that the broker has the opportunity frequently to check the validity of an 'under reference' order;(j) No person may visit the dealing room of any broker or any bank except with the consent of a Manager or Director of that institution. A broker shall not in any circumstances permit any visitors from a bank to deal for his bank in the dealing room of that broker;(k) Management of banks should issue clear directions to staff on the monitoring, control and recording of 'after hours' dealing from premises other than bank dealing rooms. All deals of this kind must be properly authorised and confirmed;(l) A bank dealer shall not apply unfair pressure upon a broker to pass information which it would be improper for the broker to pass. Unfair pressure would for example include a statement made in any form that a failure to co-operate would lead to reduction in the business given by the principal or by other principals to the broker;(m) A principal should not place an order with a broker solely with the intention of finding out the name of a counterparty, who can be contacted directly with a view to concluding further deals;(n) Management of banks and brokers should lay down clear directions to staff on the extent to which dealing in foreign exchange ordeposits for personal accounts is permitted. Any such dealing must be strictly controlled;(o) Care should be taken over the positioning of 2-way loudspeakers in dealing rooms; and(p) Brokers and dealers should inform each other if conversations are being recorded. The use of such equipment is encouraged as a sensible means of enabling any subsequent disputes and differences to be settled.Amended: April 2011
October 07BC-2.4 BC-2.4 Passing of Details
BC-2.4.1
The passing and recording of details form an essential part of the transaction and the possibility of errors and misunderstanding is increased by delay and by the passing of details in batches. Brokers should pass details verbally, and principals should be prepared to receive them, normally within a few minutes after deals have been concluded.
October 07BC-2.4.2
When arranging and passing details on forward contracts in foreign exchange, banks and brokers must ensure that the rate applied to the spot end of the transaction bears a close relationship to the spot rate at the time the deal was concluded.
October 07BC-2.5 BC-2.5 Confirmations
BC-2.5.1
Written confirmation by a broker is the final check on the details of the transaction. The handling of confirmations must take account of the desire of brokers to have a realistic time-limit placed on their liability for differences. There is an obligation on recipients to check such confirmations. Initial confirmations should be sent out by telex without delay, and at the latest by close of business on the same working day. They should be followed up by written confirmation, normally hand-delivered and receipted before close of business on the following working day.
October 07BC-2.5.2
Banks must check all confirmations carefully upon receipt so that discrepancies shall be quickly revealed and differences minimised. Principals shall also make enquiries of brokers about particular confirmations which have not been received within an appropriate time (as above) or about any changes in contract terms.
October 07BC-2.5.3
In the case of deals where a bank pays against telex confirmation, the broker remains liable for differences until receipt of written confirmation is provided by the bank.
October 07BC-2.6 BC-2.6 Differences and Disputes
BC-2.6.1
The majority of differences payable by brokers arise from errors occurring in payment or repayment instructions. They also arise from a broker, having in good faith indicated a firm rate, being unable to substantiate his quotation.
October 07BC-2.6.2
Any differences deemed payable by a broker to a bank (or by a bank to a broker) should be settled as soon as possible. The parties should provide each other with documents, setting out the exact details of and circumstances surrounding the deal.
October 07BC-2.6.3
It is acknowledged that differences are sometimes paid by 'points'. The management of broking firms should always ensure that this practice is strictly controlled and monitored.
October 07BC-2.6.4
All differences settled by direct payment should be advised in writing by the broker to the Director of Reserve Management, CBB, (copied to the Bank) indicating the amount paid and the other party's name. The CBB reserves the right to ask for further information at its discretion.
October 07BC-2.7 BC-2.7 Conduct
BC-2.7.1
The CBB will regard any breaches of the rules stated below regarding gifts, favours, betting and entertainment unacceptable.
October 07Gifts and Favours
BC-2.7.2
No broker, including management, employees and other persons acting on their behalf, shall offer or give inducements to dealing room personnel of a bank. No gifts or favours whatsoever shall be so given unless the broker is satisfied that the person responsible for dealing operations in the bank concerned has been informed of the nature of the gift or favour.
October 07BC-2.7.3
Employees of banks shall not solicit inducements from brokers, nor shall they receive unsolicited gifts or favours from brokers without informing the person responsible for dealing operations in the bank concerned of the nature of such gifts or favours.
October 07Bets
BC-2.7.4
The making or arranging of bets between brokers and bank dealers is totally unacceptable.
October 07Entertaining
BC-2.7.5
It shall be the responsibility of management in both banks and brokers to ensure that entertainment offered in the course of business does not exceed reasonable limits and does not infringe standards of propriety and decency.
October 07BC-2.8 BC-2.8 Responsibility
BC-2.8.1
Brokers shall be responsible for ensuring that:
(a) Their principals understand fully the limitations of the brokers' responsibilities for business and market conducted;(b) All their principals understand that they are required to conform, where appropriate, to the Code of Conduct;(c) Their staff carrying out transactions on behalf of principals are adequately trained both in the practices of the market-place and in the firm's responsibilities to principals; and(d) The CBB is notified of any changes in broking staff, in accordance with CBB requirements.October 07BC-2.8.2
Bankers shall be responsible for ensuring that:
(a) Their dealing staff are adequately trained and supervised in the practices of the market (the requirement of this Code of Conduct should be fully understood by all staff involved in foreign exchange and currencydeposit operations);(b) [This Subparagraph was deleted in April 2022];(c) Their staff understand that the ultimate responsibility for assessing the creditworthiness of a borrower or lender lies with the bank and not the broker;(d) Brokerage is normally payable at the end of the month in which the money passes, or otherwise by special arrangement; and(e) There is no pressure on brokers to reduce charges below the approved minimum rates.Amended: April 2022
October 07BC-2.9 BC-2.9 Market Regulations – Foreign Exchange
Currencies
BC-2.9.1
A broker will, in response to an enquiry from any bank, make known the currencies which it elects to quote and to make a service in.
October 07BC-2.9.2
Each broker shall provide, on request by a bank taking a service, general market information on all currencies handled (whether for the time being active or not) by that broker.
October 07Brokerage
BC-2.9.3
Brokers shall comply with the minimum scales of brokerage charges (see Section BC-4.6) agreed in consultation with the Bankers' Society Council from time to time, or laid down by the CBB.
In cases where there is no established minimum scale of brokerage charges, no deals shall be transacted until a rate has been agreed. Rates of brokerage in these cases should be agreed in advance, and only by Directors or senior managers on each side, and in no event by the dealers themselves.October 07BC-2.9.4
Put-through deals may be net of brokerage.
October 07BC-2.9.5
Brokerage should be expressed in US dollars.
October 07BC-2.10 BC-2.10 Market Regulations – Currency Deposits
Brokerage
BC-2.10.1
Brokers shall comply with the minimum scales of brokerage charges (see Section BC-4.6) agreed in consultation with the Bankers' Society Council from time to time, or laid down by the CBB. In cases where there is no established minimum scale of brokerage charges, no deals shall be transacted until a rate has been agreed. Rates of brokerage in these cases should be agreed in advance, and only by Directors or senior managers on each side, and in no event by the dealers themselves.
October 07BC-2.10.2
Calculation of brokerage on all currency deposits shall be worked out on a 360-day year, or a 365-day year, according to normally accepted market practice. For example, Sterling and Kuwaiti Dinars are on a 365-day year basis, and US dollars and Saudi Riyals are on a 360-day year basis.
October 07Brokers' confirmations and statements should express brokerage in US dollars.
BC-2.10.3
In a forward-forward
deposit (e.g. one month against six months) the brokerage to be charged shall be on the actual intervening period (i.e. in the above example - five months).October 07BC-2.10.4
Put-through deals may be net of brokerage.
October 07BC-2.11 BC-2.11 Market Discipline
BC-2.11.1
As part of its responsibility for supervising the conduct of brokers and dealers in the foreign exchange and currency markets, the CBB may, at its discretion:
(a) Investigate any complains concerning the conduct of brokers and dealers;(b) Investigate possible breaches of this Code by brokers and banks; and/or(c) Take such further action as it considers appropriate, in the light of all the relevant facts.Amended: January 2011
October 07BC-2.12 BC-2.12 Adjustment of Value Dates in Case of Unexpected Banking Closing Dates
BC-2.12.1
Spot transactions and outrights:(a) Original agreed upon value date for identical currency sold and purchased: extension of value date to next possible value date for both currencies; and(b) Original agreed upon value date for non-identical currency sold and purchased (for instance, Friday for US Dollars and Saturday for Gulf Currencies): as unexpected banking closing days for non-Middle Eastern currencies are unlikely - value of non-Gulf currencies unchanged and value of Gulf currency on the next working day, adjusting spot or outright rate taking into account interest rate difference between the two currencies.
For pure outrights it would be advisable to adopt same system as for swaps; however, implied swap difference is not visible or identical for both parties.• It can be assumed that, if the above rule would cause substantial losses for one party, dealers will re-negotiate a new rate, on a case-by case basis; if no agreement can be reached, the CBB - as final arbitrator - will fix the interest rates, prevailing at that time, which will be used to calculate the points difference, with which the outright rate will be adjusted.It is possible that payment instructions for counter-currency are already sent out and cannot be cancelled; in that case the paying party should be entitled to the proceeds of the unexpected use of funds by the receiving party.
Amended: April 2011
October 07BC-2.12.2
Deposits :(a) Maturing on unexpected closing day(s): Extendingdeposit to next possible value date; interest to be calculated in the extended period at original agreed upon interest rate;(b) Starting on unexpected closing day(s) and maturing after unexpected closing day(s): Starting date will be extended to next possible value date without altering maturing date; interest to be calculated on the shortened period at the originally agreed upon interest rate; and(c) Starting on unexpected closing day(s) and maturing before or on next possible value date: Cancellation of deal:1. If payment instructions are already sent out by lender and can only be executed on next possible value date, and cannot be cancelled, borrower ensures repayment will be done on the same next possible value date. If in that case borrower cannot repay because of deadline of receiving instructions by correspondent on same next possible value day, parties negotiate a new deal starting at value date of payment by lender and maturing according to new deal.2. If payment instructions are already sent out by lender for capital and by borrower for capital and interest both payments will be executed at same next possible value date, lender should refund to borrower unearned interest.Amended: April 2011
October 07BC-2.12.3
Swaps :(a) Maturing on unexpected closing day(s): Extendingswap to next possible value date for both currencies, adjustingswap difference according to formula -swap difference divided by original number of days and multiplied by new number of days;(b) Starting on unexpected closing day(s) and maturing after unexpected closing day(s): Starting date for both currencies would be extended to next possible value date for both currencies without altering maturing date, adjustingswap difference according to Formula under Paragraph BC-2.12.3(a); and(c) Starting on unexpected closing day(s) and maturing before or on next possible value date: Deals are cancelled.If starting or maturing date of original swap under Paragraph BC-2.12.1 or Paragraph BC-2.12.2 is substantially different, per currency swap difference has to be recalculated in mutual agreement between the dealers;
• It is possible that payment instructions for counter currency are already sent out and cannot be cancelled - in that case paying party should be entitled to the proceeds of the unexpected use of funds by the receiving party;• It is possible that payment instructions for Gulf currencies are already sent out and cannot be cancelled - in these cases rules according to Paragraph BC-2.12.2(c)-1 and Paragraph BC-2.12.2(c)-2 should be applied.Amended: April 2011
Amended: January 2011
October 07BC-3 BC-3 Client Confidentiality
BC-3.1 BC-3.1 Disclosure of Information about Individual Accounts
BC-3.1.1
In accordance with Article 117 of the CBB Law, banks must not publish or release information to third parties concerning the accounts or activities of their individual customers, unless:
(a) Such information is requested by the CBB or by an order from the Courts;(b) The release of such information is approved by the customer concerned; or(c) It is in compliance with the provision of the law or any international agreements to which the Kingdom is a signatory.Amended: April 2011
October 07BC-4 BC-4 Customer Account Services and Charges
BC-4.1 BC-4.1 Minimum Balance and Charges on Savings Accounts [This Section was deleted in April 2018]
BC-4.1.1
[This paragraph was deleted in April 2018].
Deleted: April 2018
October 07BC-4.1.2
[This paragraph was deleted in April 2018].
Deleted: April 2018
October 07BC-4.2 BC-4.2 Dinar Certificates of Deposits – Rules
BC-4.2.1
The purpose of the contents of this Section is to set out rules governing the issue of Dinar
Certificates of Deposit by retail bank licensees.October 07BC-4.2.2
For the purpose of this Section, 'Dinar
Certificates of Deposit ' are financial instruments payable in Bahrain Dinars. They must be negotiable – in accordance with the Law of Commerce (No. 7) of 1987 – and must satisfy the conditions set out in this Section.October 07Issue
BC-4.2.3
Dinar
Certificates of Deposit may be issued only by retail bank licensees and must be payable at their offices in Bahrain.October 07BC-4.2.4
Retail bank licensees may issue
Certificates of Deposit to bothresident and non-resident customers and to other banks inside and outside Bahrain.October 07BC-4.2.5
Retail bank licensees may not issue
Certificates of Deposit until they receive the necessary funds.October 07Denominations
BC-4.2.6
Certificates of Deposit may be issued for any amount subject only to a minimum denomination of BD 30,000.October 07Maturities
BC-4.2.7
Certificates of Deposit may be issued for any maturity between 183 days (6 months) and 5 years.October 07Interest Rates
BC-4.2.8
The interest rates on
Certificates of Deposit may be freely agreed between banks and theircounterparties at the time of issue.October 07BC-4.2.9
Interest may be payable by agreement at a fixed or floating rate. In the case of a floating interest rate, the formula for revising the rate must be specified at the time of issue.
October 07BC-4.2.10
Interest may be payable at maturity or on earlier dates specified at the time of issue.
October 07BC-4.2.11
As an alternative to paying interest,
Certificates of Deposit may be issued (like Treasury bills) at a discount to their face value (the repayment amount).October 07BC-4.2.12
Interest and discounted values should be calculated on the basis of a 360 day year.
October 07Negotiability
BC-4.2.13
In view of their negotiability,
Certificates of Deposit may be freely traded between banks, and between banks and customers. Issuing banks are permitted to re-purchase their own Certificates.October 07Safe Custody
BC-4.2.14
Although it is not obligatory, holders of
Certificates of Deposit are advised to keep these certificates with a bank for safecustody and to handle them with care at all times.October 07Reserve Ratio
BC-4.2.15
Outstanding
Certificates of Deposit are subject to reserve requirements in accordance with the provisions set out under Section BR-4.1.Amended: October 2013
October 07Other Conditions
BC-4.2.16
Banks must not describe
deposit receipts, confirmations and other non-negotiable documents relating to ordinarydeposits as 'Certificates of Deposit ' and must not include such liabilities amongCertificates of Deposit in their monthly statistical reports (also see Module BR).October 07BC-4.2.17
In their statistical reports (also see Module BR), banks should always classify their outstanding
Certificates of Deposit according to the type of customer (e.g.resident etc.) to whom they were first issued.October 07BC-4.3 BC-4.3 Disclosure of Charges by Retail Banks
BC-4.3.1
In order to improve retail customer awareness and enhance transparency of retail banks charging structures, all retail banks must display in a prominent position, in Arabic and in English, by notice in their banking halls (both head offices and
branches ), a list of all applicable charges.Amended: October 2012
Amended: April 2011
October 07BC-4.3.2
Retail banks must also ensure that each customer is in receipt of their current list of charges, by enclosing such a list with account statements and displaying such charges on their websites. The list must specify standard charges and commissions that will be applied by the retail bank to individual services and transactions and to specific areas of business. Such notification must be made in instances where there are changes in the fees or when new fees are introduced.
Amended: April 2013
Amended: October 2012
October 2007Credit Agreements
BC-4.3.4
For the purpose of this Section, the following definitions apply:
(a) Credit agreement – Means all instalment financing agreements and lease agreements, as well as credit cards, overdraft, revolving and other types of credit offered to retail customers;(b) Customer – Means both the debtor and the guarantor (if any) and/or any potential debtor or guarantor;(c) Conspicuous notice – Means a written statement in both Arabic and English languages which is easily visible and legible and displayed in all retail banks' premises open to the public (head offices andbranches ), and via means such as websites, newspapers and other press notices;(d) Nominal annual rate – Means the interest rate charged to the customer, calculated by dividing the amount of the total interest by the amount of the funds provided to the customer and excluding any other charges, the results of which is divided by the number of years of the term of the credit agreement;(e) Outstanding credit amount – Means the amount outstanding under a credit agreement representing the amount of funds provided to the customer and any other charges that are included as part of the principal amount to be repaid by the customer over the duration of the agreement less any repayment made related to the principal amount at a specified date;(f) Principal – Means the amount of credit received plus any other charges, the total of which is subject to interest; and(g) Retail customers – Means a natural person.Added: October 2012BC-4.3.3
A retail bank must make available, at their premises, information leaflets containing information on the key products and services in respect of all credit agreements including:
(a) The Annual Percentage Rate (APR) as defined in Paragraph BC-4.3.10, for instalment financing facilities only; and(b) The annual interest rate on credit facilities (as referred to in Paragraph BC-4.3.14), commission, fees, one-off charges, expenses on behalf of third parties, exchange rates applied and any other charges.Amended: October 2012
Amended: July 2012
Amended: April 2011
October 07General Rules
BC-4.3.5
Where a retail customer has a credit agreement with a retail bank, retail banks must:
(a) Duly inform their customers in accordance with this Module about the nature and the characteristics (including relevant risks) of the credit agreements and services offered by them, and about the terms and conditions governing such agreements;(b) Periodically inform, in writing, their customers on the evolution and the terms of any credit agreement signed, throughout the duration of the contract (refer to Paragraphs BC-4.3.24 and BC-4.3.25);(c) Respond in due time, to customers' requests for the provision of information and clarifications regarding the application of contractual terms (refer to Paragraphs BC-4.3.29 and BC-4.3.30);(d) Appoint a customer complaints officer and publicise his/ her contact details (refer to Chapter BC-9 on Customer Complaints Procedures);(e) Ensure the proper training of employees involved in interfacing and providing specific information to customers;(f) Disclose information required in this document in both Arabic & English languages;(g) Show clearly the APR for instalment facilities and the annual rate of interest for other credit facilities on the credit agreement application and 'key terms disclosure' document; and(h) Disclose all information in a clear and readable form (refer to Paragraph BC-4.3.6).Added: October 2012BC-4.3.6
Marketing of customer credit agreements, advertising and sales promoting credit agreements, irrespective of the media used (SMS, Internet, printed material, telephone solicitation) must be clear and understandable, must be true and not misleading and meet the basic customer information requirements as defined in this Module. Retail banks are also asked to take special care to ensure that the content of any advertising material does not mislead or deceive the public in any way.
Amended: July 2021
Added: October 2012BC-4.3.7
The use of "small print" to make potentially important information less visible is not compatible with good business conduct, and should be avoided.
Added: October 2012Minimum Disclosure Requirements
BC-4.3.8
Retail banks must make:
(a) Public disclosure regarding credit agreements; and(b) Disclosures to individual customer(s), whether these be during the course of the initial negotiation of the credit agreement or during the term of the facility being offered.Added: October 2012Public Disclosure Requirements for all Credit agreements
BC-4.3.9
The following public disclosures must be made by
conspicuous notice for all types of credit agreements:(a) Any obligation on the part of the customer to open a deposit account with the retail bank as a condition of granting the credit agreement;(b) Any late payment charges;(c) The level of fees for any special services rendered, or one-off expenses, as well as any amount collected by retail banks on behalf of third parties;(d) Any fees or charges payable under any linked or mandatory contract entered into as a condition for the granting of the credit agreement, such as payment protection insurance; and(e) Any other charges not included above.Added: October 2012Additional Public Disclosure for Instalment Financing Facilities
BC-4.3.10
In addition to the requirements under Paragraph BC-4.3.9, retail banks must publicly disclose by
conspicuous notice for instalment financing facilities:(a) The current Annual Percentage Rate (APR) as calculated using the APR methodology in Paragraph BC-4.3.31. The APR displayed must be calculated based on the following scenarios. In case of consumer finance, amount borrowed is BD10,000 for a 7-year term and for housing facilities, BD100,000 for 25 years.(b) The Annual Percentage Rate (APR), must be broken down as follows:(i) The annual nominal interest rate payable on the instalment financing;(ii) Administration/handling fees;(iii) In the case of finance lease contracts/ijara or deferred purchase contracts, any fees for purchasing the asset; and(iv) Any other mandatory charges (contingent costs are excluded); and(c) The terms and conditions for early repayment, partial or full, of the credit agreement, or for any change in the terms and covenants of the credit agreement, as well as any relevant charges (where permitted) and the way in which these are calculated.Added: October 2012BC-4.3.11
The APR is a standard measure that allows customers to compare total charges for instalment financing facilities on a like-for-like basis. The APR allows the customer to compare the total charge for credit over differing periods (e.g. – two versus three years) or offered by different retail banks with differing payment profiles and taking into account the payment of any other fees payable as a condition of the contract, such as administration fees or insurance premiums.
Added: October 2012BC-4.3.12
Any advertising through any media means of instalment financing facilities, offered by the retail banks must specify only the APR (including all fees and charges) and no other rates, i.e. nominal, base, flat or rates by any other names.
Added: October 2012BC-4.3.13
For the purposes of Paragraph BC-4.3.10, the disclosures can be provided as one APR or a range of APRs for retail banks that provide instalment financing to different segments and products. A retail bank may have different customer segments with different risk profiles, for whom the APR offered on the same product may vary. However, the disclosures must comply with the scenarios outlined in Subparagraph BC-4.3.10(a).
Added: October 2012Additional Public Disclosure for Credit Agreements other than Instalment Financing Facilities
BC-4.3.14
In addition to the requirements under Paragraph BC-4.3.9, retail banks must publicly disclose by
conspicuous notice for Credit Agreements other than instalment financing facilities:(a) For credit cards, the monthly and the annual rate of interest plus other fees and charges;(b) For overdrafts, the annual rate of interest plus other fees and charges;(c) For floating-rate credit agreements, the interest rate clearly defined on the basis of the relevantbase rate , the periods during which this rate would apply, as well as information on key factors that could affect the total cost of the credit agreement; and(d) For instances where the customer exceeds contractual credit lines, the terms and any relevant charges.Added: October 2012BC-4.3.15
For credit agreements other than instalment financing facilities, any advertising through any media means must specify only the annual interest rate and other fees and charges.
Added: October 2012BC-4.3.16
For credit agreements other than instalment financing facilities, banks are prohibited from using the term APR in any advertising.
Added: October 2012Disclosure to Individual Customers: Initial Disclosure Requirements of Key Terms
BC-4.3.17
Retail banks must make clear to potential customers, prior to entering into a credit agreement, all relevant key terms of the agreement in the credit agreement application and 'key terms disclosure' document, in order for them to clearly understand the characteristics of the services and products on offer. Retail banks must also comply with the disclosure requirements under the "Code of Best Practice on Consumer Credit and Charging" (see Appendix CM-2).
Added: October 2012BC-4.3.18
The above "key terms disclosure" document must be summarised in plain English and Arabic. This document must be signed and dated by the customer(s) in duplicate as having been read and understood, prior to signing a credit agreement. One copy should be retained by the customer and the other must be retained by the retail bank in their customer file.
Added: October 2012BC-4.3.19
For credit agreements where a retailer extends credit to purchase goods or services by operating in agreement with retail banks, all conditions of the credit agreement must be disclosed in the credit agreement application and 'key terms disclosure' document, including when interest will begin to accrue, along with information on any indirect charges.
Added: October 2012BC-4.3.20
Credit agreements, referred to in Paragraph BC-4.3.19, must be finalised with an employee of the retail bank, whether located at the premises of the retailer or at the premises of the retail bank providing the credit. Interest must in no event be charged before the disbursement of funds.
Added: October 2012BC-4.3.21
Retail banks must inform the customers on the nature of their contractual relationship with the retail outlet and the customers' rights arising as a result of this relationship.
Added: October 2012BC-4.3.22
In addition to the initial disclosure of key terms noted in Paragraphs BC-4.3.17 to BC-4.3.21, the "key terms disclosure" document must at the time of signing the credit agreement, amongst other things, make clear:
(a) The detailed breakdown of the payments:(i) Theprincipal amount being borrowed, the interest per month and the maturity of the credit agreement;(ii) The net amount provided to the customer after deducting or applying any upfront or other charges;(iii) The total interest payments andprincipal repayment for the term of the credit agreement; and(iv) The total administration/handling fees and any other fees and charges spread over the term of the credit agreement.(b) The APR and the nominal annual rate as defined in Paragraphs BC-4.3.10 and BC-4.3.4(d) respectively;(c) Whether the rate of interest is fixed or can be varied, and under what circumstances;(d) The basis on which interest is charged (e.g. actual reducing balance) and applied to the account (e.g. monthly or quarterly compounding) and whetherprincipal repayments are taken into account in the calculation, together with an illustration of the calculation method;(e) The detailed costs associated with "top-ups" of credit agreements or other alternative arrangements for extending additional credit or early repayments, whether partial or full, of amounts due including the treatment of remaining interest and the payment of premium for insurance;(f) Any late payment charges;(g) The annual interest rate and credit limit being offered for credit agreements such as credit cards and overdrafts; and(h) Any other charges related to the credit agreement not included above.Amended: January 2019
Added: October 2012BC-4.3.23
Retail banks 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 BC-4.3.22. The CBB will monitor compliance with the spirit as well as the letter of the requirements in this Chapter.
Added: October 2012Disclosure to Individual Customers: During the Term of the Credit Agreement
BC-4.3.24
Retail banks must, at the time of signing the credit agreement, give the clients information on the payment schedule of the credit agreement, including the breakdown of principal, interest and other charges per month for the whole life of the facility. Information must be given, free of charge, at least on a semi-annual basis, unless the period of debt servicing is shorter or where there exists a prior agreement on a more frequent basis.
Amended: January 2019
Added: October 2012BC-4.3.25
In addition to the requirements under Paragraph BC-4.3.24, when credit is granted through credit cards or overdraft facilities, monthly statements must be provided and include information on minimum payment.
Added: October 2012BC-4.3.25A
Retail bank licensees must, when billing their customers, reflect the card transactions without rounding off the amounts in Fils. Retail bank licensees must collaborate with acquirers and Visa/MasterCard network schemes to ensure that there is no rounding off in any transaction irrespective of the currency of the transaction.
Added: January 2019Variation Disclosures Requirements
BC-4.3.26
Retail banks must disclose to the customer in advance, either collectively or individually, all relevant changes or variations to a credit agreement. The circumstances in which a customer must be provided with variation disclosures are:
(a) If both the retail bank and customer agree to change the credit agreement; in this case, the customer must be provided in writing with full particulars of the change, at least seven calendar days before it takes effect; and(b) If the credit agreement gives the retail bank power to vary fees or charges, the amount or timing of payments, the interest rate or the way interest is calculated, and the retail bank decides to exercise that power, the customer must be provided with full particulars of the change, including an updated schedule of the total interest payments andprincipal repayment for the remaining term of the credit agreement, at least thirty calendar days prior to the date the change takes effect. Such notice is to enable the customer to decide whether to accept the new terms or terminate the agreement by settling the outstanding credit amount, in accordance with relevant provisions therein, which must have been stated in a clear and understandable manner.Added: October 2012BC-4.3.27
Any increase of the interest rate or the amount of any fee or charge payable under a credit agreement, must be disclosed publicly, by
conspicuous notice , at least thirty calendar days prior to the date the change takes effect by:(a) Displaying the information prominently at the retail bank's place of business; and(b) Posting the information on the retail bank's website.Added: October 2012Request Disclosure
BC-4.3.29
The retail bank must provide a reply to any request for disclosure within fifteen business days of receiving the request.
Added: October 2012BC-4.3.30
Disclosures requested by the customer may include but are not limited to any or all of the following information about a credit agreement:
(a) The effect of part prepayment on the customer's obligations;(b) Full particulars of any changes to the agreement since it was made;(c) The amount of any fee payable on part prepayment and how the fee will be calculated;(d) The amount required for full prepayment on a specified date and how the amount will be calculated;(e) The outstanding credit amount, including any outstanding interest charge (calculated at the date the disclosure statement is prepared);(f) The amount of payments made or to be made or the method of calculating the amount of those payments;(g) The number of payments made or to be made (if ascertainable);(h) How often payments are to be made;(i) The total amount of payments to be made under the agreement, if ascertainable; and(j) A copy of any disclosure statement that was or should have been provided before the request was made.Added: October 2012BC-4.3.31
The APR must be calculated using the following methodology:
K=m K'=m' Σ Ak
(1 + i) tk =Σ A'k'
(1 + i) tk'K=1 K'=1 Added: October 2012BC-4.3.32
The meaning of letters and symbols used in the above formula are:
K is the number identifying a particular advance of credit;K' is the number identifying a particular instalment;Ak is the amount of advance K;A'k' is the amount of instalment K;Σ represents the sum of all the terms indicated;m is the number of advances of credit;m' is the total number of instalments;tk is the interval, expressed in years between the relevant date and the date of advance K;tk' is the interval expressed in years between the relevant date and the date of instalment K';i is the APR, expressed as a decimal.Added: October 2012BC-4.3.33
For the purpose of this Chapter, the 'relevant date' is the earliest identifiable date on which the borrower is able to acquire anything which is the subject of the agreement (e.g. delivery of goods), or otherwise the 'relevant date' is the date on which the credit agreement is made.
Added: October 2012BC-4.4 BC-4.4 Accounts Held for Clubs and Societies in Bahrain [This Section was deleted in January 2013 as requirements are covered under Section FC-1.6]
BC-4.4.1
[This Paragraph was deleted in January 2013].
Deleted: January 2013
BC-4.4.2
[This Paragraph was deleted in January 2013].
Deleted: January 2013
BC-4.4.3
[This Paragraph was deleted in January 2013].
Deleted: January 2013
BC-4.5 BC-4.5 Current Accounts
BC-4.5.1
Retail bank licensees levying fees on their low-balance customer current accounts are required by the CBB to apply such fees to average balances when these fall below a prescribed level during a specified period.
Amended: January 2011
October 07BC-4.5.2
In order to prevent incidences of returned cheques due to maintenance of low-balance current accounts, the banks may convert some low-balance and/or inactive current accounts to savings accounts.
October 07BC-4.6 BC-4.6 Brokerage Fees
BC-4.6.1
The purpose of the contents of this Section is to set out the scale of brokerage fees effective for all banks in Bahrain.
October 07BC-4.6.2
The scale of fees is the result of discussion and consultation between The Bankers' Society and the Bahrain Money Brokers.
October 07BC-4.6.3
For the list of brokerage fees, see Appendix BC-6.
October 07BC-4.7 BC-4.7 Notification to the CBB on Introduction of New or Changes to Customer Products and Facilities
BC-4.7.1
[This Paragraph was deleted in October 2016.]
Deleted: October 2016
Amended: October 2012
Amended: January 2011
October 07BC-4.7.2
All retail banks licensed by the CBB are required to notify the CBB before the introduction of any new products or services or any changes in existing product/service. The CBB will respond to the concerned bank within one week of receipt of the notification if it has any observations on the new application.
Amended: October 2016
Amended: January 2011
October 07BC-4.7.2A
The reference to changes to customer products refers to the structure, features, risk profile in terms and conditions in existing product/service refers to changes that will have an additional financial cost to the customers.
Added: October 2016
BC-4.7.3
[This Paragraph was deleted in October 2011].
Deleted: October 2011
Amended: April 2011
Amended: January 2011
October 07BC-4.8 BC-4.8 Dealing with Inheritance Claims
BC-4.8.1
Licensees must ensure that no transfer of legal ownership of financial assets is made until they have sight of documentation (which must be duly copied for their records) from the Ministry of Justice and Islamic Affairs confirming the entitlement of a person or persons to inherit from the deceased. Such documentation must be complied with precisely. Particular care must be taken where minors (children) or other people lacking full legal capacity are named as inheritors.
Amended: October 2012
Amended: October 2011
Amended: January 2011
October 07BC-4.8.2
Without prejudice to Paragraph BC-4.8.1, financial assets may be distributed to the order of an individual provided that individual is named in a mandate, duly certified by the Ministry of Justice and Islamic Affairs, as having the permission to act on behalf of all of the inheritors.
Amended: October 2012
Amended: October 2011
Amended: January 2011
October 07BC-4.9 BC-4.9 Compliance with the Code of Best Practice on Consumer Credit and Charging
BC-4.9.1
Conventional bank licensees must comply with the Code of Best Practice on Consumer Credit and Charging as attached in Appendix CM-2 and the Investment Business Code of Practice requirements in this Chapter throughout the lifetime of their relationship with acustomer .Adopted: April 2008BC-4.9.2
Conventional bank licensees must take responsibility for compliance with the above requirements by all persons carrying outregulated banking services on their behalf.Conventional bank licensees must put in place appropriate measures across all their business operations and distribution channels to ensure compliance with the requirements of the Code of Best Practice on Consumer Credit and Charging where relevant.Adopted: April 2008BC-4.10 BC-4.10 Transaction Advice
BC-4.10.1
All retail banks must provide at no charge, a transaction advice service for its
customers (natural persons ). This service information must be communicated through short message service (SMS) on all types of withdrawals/deductions from customer's account and any credit and pre-paid card transaction, including, but not limited to:(a) ATM withdrawals;(b) Internal and external transfers from the customer's account/credit and pre-paid cards;(c) Withdrawals through a bank counter;(d) Point of sale (POS) transactions;(e) Any withdrawals and payments from the customer's account and credit and pre-paid-cards through mobile, internet or other electronic means;(f) Any repayment of outstanding credit card balances; and(g) Any other withdrawals or deductions from the customer's account and credit and pre-paid cards.Amended: October 2016
October 2011BC-4.10.2
[Deleted in October 2016 as per EDBS/KH/34/2016 letter dated 28th July 2016].
Deleted: October 2016
October 2011BC-4.11 BC-4.11 Donations to NGO Accounts
BC-4.11.1
All retail banks must waive any administrative fees when transferring donated funds from the donor accounts to the accounts of NGOs registered with the Ministry of Social Development (MoSD), provided that a valid funds collection license is presented to the bank by the concerned NGO.
Added: April 2014BC-4.11.2
All retail banks must refrain from transferring any funds, collected by way of donations or fund raising, to the account of any society or club where the NGO has not submitted a valid written fund collection license to the bank, as required under Paragraph BC-4.11.1.
Added: April 2014BC-4.11.3
Banks must notify the CBB in instances where donated funds have been received and no valid license was submitted. The CBB will then inform the MoSD accordingly.
Added: April 2014BC-4.11.4
NGOs, including societies and clubs, registered with the MoSD, and having fund collection licenses, are listed in the NGOs fund collection directory, available on the website of the MoSD.
Added: April 2014BC-4.11.5
NGOs registered with the MoSD and holding a fund collection license must present such license to the concerned banks in order for the related administration fee to be waived.
Added: April 2014BC-4.11.6
Administration fees will be waived by the banks only for the period of the validity of the funds collection license.
Added: April 2014BC-4.12 BC-4.12 Credit Check Reports
BC-4.12.1
Where a pensioner has been requested to produce a credit report by the Social Insurance Organization (SIO) to establish his/her credit standing, conventional retail bank licensees must not levy any administrative charges.
Added: October 2015BC-4.13 BC-4.13 Fees and Charges for Services Provided to Individuals
BC-4.13.1
Retail bank
licensees must comply with the caps on fees and charges for standard services provided to individuals effective from 1st May 2018 as per the table in Appendix BC-7 in Part B of the CBB Rulebook Volume 1.Added: April 2018
BC-4.13.2
Fees and charges on withdrawals done through bank counters for amounts below the ATM withdrawal limits must be waived for all of the following customers:
(a) Orphans;(b) Widows;(c) Pensioners;(d) Individuals receiving social subsidies from Ministry of Labor and Social Affairs;(e) Students; and(f) Bahraini nationals with a monthly salary below BD 250.Added: January 2019BC-4.14 BC-4.14 Fees and Charges for Services Provided to Companies Under Formation
BC-4.14.1
Retail bank licensees may charge companies under formation a fee capped at BD 10 for the issuance of letter of confirmation of capital maintained with the bank regardless of the capital amount deposited and maintained.
Added: October 2018
BC-4.14.2
Retail bank licensees must not charge any setup fees for opening bank accounts for companies under formation.
Added: October 2018
BC-4.15 BC-4.15 Interest on Credit Card Transactions
BC-4.15.1
Conventional retail bank licensees must comply with the following requirements with regards to charging interest on credit card statement dues:(a) Interest must not be charged if the customer pays the full amount billed and due before or on the due date specified in the monthly credit card statement except for cash withdrawal transactions;(b) Interest must not be charged on partial payments made by the customer on or before the due date specified in the monthly credit card statement against credit card amount billed and due;(c) Interest on cash withdrawal transactions must be computed from the date of the transaction ("transaction date");(d) Interest on credit card amounts billed but unpaid on or before the due date must be computed from the posting date of the transaction; and(e) Interest must not be charged on outstanding interest amounts, fees and charges due from the customer.Added: July 2019
BC-4.15.2
For the purpose of charging interest on credit card dues,
conventional retail bank licensees must only calculate interest charges using 365-days a year basis.Added: July 2019
BC-4.16 BC-4.16 Interest on Credit Facilities
BC-4.16.1
Conventional retail bank licensees must not charge interest on credit facilities using a 'monthly flat rate'; they must instead use an effective interest rate based on a reducing balance method.Added: October 2019BC-4.17 BC-4.17 Blocking Customer Accounts
BC-4.17.1
Conventional retail bank licensees must not block the accounts of a customer (who has a financing arrangement with it) due to customer’s termination from his or her employment or retirement regardless of the bank’s contractual rights to take such action. Banks instead must agree on other arrangements with the customer for the repayment of the financing.Added: April 2020BC-4.18 BC-4.18 Fund Transfers by Customers of Payment Service Providers (PSP)
BC-4.18.1
Conventional bank licensees that act as acquirers or payment gateways for PSPs, must not charge more than 100 fils in line with the Electronic Fund Transfer System (EFTS) requirements to the customers of PSPs for normal fund transfers made electronically.Added: October 2020BC-4.19 BC-4.19 Merchant Fees on Payments to Zakat and Charity Fund
BC-4.19.1
Conventional bank licensees must exempt the Zakat and Charity Fund (“the Fund”) of the Ministry of Justice, Islamic Affairs and Awqaf from merchant fees for payments made to the Fund.Added: April 2021BC-4.20 BC-4.20 Dormant Accounts and Unclaimed Balances
BC-4.20.1
This section sets out the requirements relating to dormant accounts which represents customer accounts including current, call, savings or fixed deposits which turn dormant due to inactivity or no claim or renewal request being made and unclaimed balances relating to various negotiable instruments such as manager cheques, amounts remaining unpaid to customers relating to their investments or amounts remaining unclaimed for other reasons such as cash not dispensed from ATMs etc.
Added: January 2022BC-4.20.2
Conventional retail bank licensees must establish policies and procedures to deal with dormant accounts and unclaimed balances which must include measures to contact the customer concerned, activation of the accounts where appropriate, return of the moneys to the customer and control measures to prevent frauds and misuse of such accounts.Added: January 2022Dormant Accounts Treatment
BC-4.20.3
Conventional retail bank licensees must treat customer accounts as dormant accounts in the following cases:(a) Current and call accounts, where there have been no transactions initiated by the customer by for a period of 12 months; or(b) Saving accounts of any type, where there have been no transactions for a period of 24 months; or(c) Fixed deposit accounts where there has been no claim or renewal request for a period of 6 months from the maturity date.Added: January 2022BC-4.20.4
For the purpose of Paragraph BC-4.20.3 (b), savings certificates with no expected withdrawals and deposit should not be considered as “dormant” unless the licensee has become aware of non-traceability of the customer and there is evidence for the same.
Added: January 2022BC-4.20.5
Conventional retail bank licensees must not treat a customer account as dormant if any one or more of the following criteria are met:a) The customer has other accounts, of any nature, with thelicensee in respect of which there are active transactions initiated by the account holder;b) The account is blocked under the requirements of a relevant competent authority; orc) The account is subject to litigations or constraints from other regulatory authorities or the customer is deceased.Added: January 2022BC-4.20.6
Notwithstanding the requirement under BC-4.20.5,
conventional retail bank licensees must notify the customer by mail, e-mail or other communication channel, when any of his accounts becomes inactive.Added: January 2022BC-4.20.7
Conventional retail bank licensees must ensure that no withdrawal or transfer or inward clearing cheque is permitted from dormant accounts unless the activation procedures set out in this section are complied with.Amended: July 2022
Added: January 2022BC-4.20.8
Conventional retail bank licensees must comply with the following additional requirements in transactions relating to dormant accounts:(a) Allow electronic and manual transfers to the account;(b) Accrue interest in respect of interest-bearing accounts at the prevailing rates depending on the terms of the contract between the bank and the customer;(c) Ensure only fees or expenses permitted by CBB is charged, provided, however, that no fee is charged when the account balances become zero;(d) Ensure that an account is closed within six months from the date the account becomes dormant and its balance becomes zero following which, a closure notification is sent to the customer by mail, e-mail or other communication channel;(e) Make attempts to periodically contact the customer through different communication means and such attempts must be documented;(f) Ensure that the movements in dormant accounts are monitored to ensure that such accounts are not being used for money laundering or fraudulent purposes by internal or external parties;(g)Licensees must ensure that any movement in dormant accounts is subject to principles of “four-eyes” or “maker and checker” involving at least one authorised signatory of thelicensee ; and(h) Ensure that changes in respect of the dormant accounts, including movement in balances, change of customer contact details, status etc. are subject to internal audit every six months.Added: January 2022BC-4.20.9
Conventional retail bank licensees must ensure that the terms and conditions of deposit agreements include provisions relevant to Subparagraphs BC-4.20.8 (a) and (d) above.Added: January 2022Activation of Dormant Accounts
BC-4.20.10
To activate a dormant account,
conventional retail bank licensees must ensure the following:(a) The customer provides thelicensee with a written or electronic request to activate the account stating the reasons for dormancy of the account;(b) The customer submits updated KYC information;(c) Activation of the account is subject to principles of “four-eyes” or “maker and checker”/ dual authority checks involving at least one authorised signatory of thelicensee ; and(d) In case of a joint account, the request for activation of the dormant account is signed by the joint accountholders authorised to operate the account unless a valid power of attorney is given.Added: January 2022BC-4.20.11
In case of requests for activation of a dormant account through electronic channels using digital signature, the
conventional retail bank licensee must check the authenticity of the request and related information, for example, through telephone or video calls, email or other measures to satisfy itself about the authenticity.Added: January 2022Unclaimed Balances
BC-4.20.12
Conventional retail bank licensees must treat the following balances that remain unpaid due to operational or other reasons as unclaimed balances:(a) Unclaimed balances relating to manager cheques, demand drafts, or cashier cheques which have not been presented /claimed during their validity periods;(b) Positive credit card balances relating to credit cards not used for a period of 1 year or more;(c) Unclaimed cash due to failed ATM/POS or electronic transactions for a period of 1 month or more;(d) Dividends that remained unpaid by non-listedconventional retail bank licensees for a period of 1 year or more; and(e) Unclaimed balances relating to investments, including undistributed profits and accrued profit/interest for a period of 1 year or more.Added: January 2022BC-4.20.13
For purposes of Subparagraph BC-4.20.12 (d), listed companies must follow the guidelines stipulated in Bahrain Bourse Resolution of year 2020, mandating the transfer of unclaimed cash dividends into the Unclaimed Cash Dividends Fund account maintained by Bahrain Clear.
Added: January 2022BC-4.20.14
Conventional retail bank licensees must make attempts to periodically contact the relevant customers or the rightful parties to return the unclaimed balances through different communication means. The licensee must maintain documentary evidence of such attempts.Added: January 2022Reporting
BC-4.20.15
Conventional retail bank licensees must report the particulars of dormant accounts and unclaimed balances in the relevant section of the Prudential Information Return ('Form PIR').Added: January 2022Prohibition of Transfer of Balances
BC-4.20.16
Conventional retail bank licensees must not transfer any of the balances in dormant accounts or unclaimed balances to their income statements.Added: January 2022BC-4.21 Insurance Cover on Loans
BC-4.21.1
The requirements in this Section apply to
conventional retail bank licensees which seek life or other insurance cover in respect of loans to a borrower. These requirements are effective from 1st April 2024, i.e. all credit exposures that mature or are repaid/prepaid in full on or after 1st April 2024 must be subject to the requirements in this Section.Added: January 2024BC-4.21.2
Conventional retail bank licensees using insurance cover as risk mitigant for its loans to individuals must comply with the following requirements:(a) Credit policies must specify whether thelicensee will bear the cost of insurance cover or if it will recover the cost from the customer;(b) If a customer wishes to buy his own insurance cover, thelicensee must not refuse to accept assignment of such policy, however, thelicensee may require the customer to ensure that the insurance policy terms, duration and features match its requirements;(c) If insurance is arranged by thelicensee for its customer, the cost recovered from the customer must be the actual cost paid by thelicensee to the insurance provider;(d) The insurance cost recovered from the customer, in the case of group insurance cover, must not exceed the proportionate aggregate cost payable to the insurance company attributable to the credit facility.Licensees must, on an annual basis, evaluate the insurance costs, which must be based on the actual insurance premiums levied by the insurer for the purpose of determining the insurance cost to be recovered for new facilities. At maturity of loans or at the point of early repayment, thelicensee must refund any excess insurance cost amount collected;(e)Licensee must not receive any commission, referral fees or any other fees from the insurance provider and/or receive any commission from the borrower;(f) Full disclosure with respect to the insurance arrangement (whether individual or group insurance cover), must be made to the customer prior to signing the loan agreement regarding:
(i) The terms of the insurance coverage and name of the insurance provider;(ii) Benefits and exclusions;(iii) Need for medical examinations, underlying illnesses not covered and the implications of health conditions on the insurance cost or the insurance claim;(iv) Payment method for the insurance cost (i.e. one time upfront payment or addition to loan amount and recovered as part of repayment instalments);(v) The insurance premium rate currently applicable and(vi) The basis and method of calculation of the insurance cost at the time of granting of the loan;(vii) Refund/adjustment of insurance cost in the case of early repayment/ pre-payments and top-ups;(g) Customers must be informed in writing if:
(i) There is a change in the insurance provider in the case of individual insurance cover;(ii) There is a possibility of additional costs to be recovered or refunds in case of upfront payments due to changes in insurance premium rates; and(iii) Additional insurance costs would be recovered from the customer if loan repayment instalments are not paid on time; and(h) The statements of account must clearly show the insurance cost as a separate item where applicable.Added: January 2024BC-4.21.3
If
licensees decide to restructure the loan but cannot obtain insurance coverage due to the customer's age or due to a ‘retiree’ status, they must inform the customer in writing about the unavailability of insurance for the extended loan period. In such cases, thelicensee must not demand full repayment of loan by the customer due to the customer’s age.Added: January 2024BC-4.21.4
Licensees’ credit policy must specify, at a minimum, the following:(a) Disclosures to be made to customers prior to signing of the loan agreement;(b) Age limits, if any, that apply for insurance cover as per thelicensee’s arrangements with the insurer and the options available to customers not meeting the age limits;(c) Measures or implications of default or extension of tenor for any reason, particularly for loans which have an expiry date falling in a higher age bracket at the time of grant of the loan; and(d) Any additional terms that apply to customers who fall within the higher age bracket.Added: January 2024BC-4.21.5
Licensees’ credit policy must also specify its approach with regard to lending and the corresponding insurance coverage implications for customers who fall within higher age groups (to be defined by the licensee) and those who have retired from employment or will retire during the tenor of the loan.Added: January 2024BC-4.21.6
For the purposes of BC-4.21.5, extension of loans to individuals who are beyond the retirement age should take into account, in addition to other factors, the increases in life expectancy in Bahrain and the general trend in loss ratios. For this purpose,
licensees should agree with their insurer the terms, conditions and procedures in order to meet the needs of individuals above the insurable age of the group loan portfolio and consider measures to be taken in the case of exceptional scenarios such as a customer in the higher age group needing to restructure a facility.Added: January 2024BC-4.21.7
Licensees using group insurance cover must perform a due diligence of the insurance provider at periodic intervals to ensure optimum benefits are obtained for their customers. The due diligence must also involve assessment of various insurance plans and loss ratios.Added: January 2024BC-4.21.8
If the insurance provider is a related party of the
licensee , the insurance cost must not be higher than the market quotes for similar insurance cover.Added: January 2024BC-5 BC-5 Dishonoured Cheques
BC-5.1 BC-5.1 Penalty System for Dishonoured Cheques
BC-5.1.1
The purpose of the contents of this Section is to set out Rules relating to the system of penalising any person, whether natural or corporate in form, (referred to as a 'customer' in this Chapter) whose cheque is:
(a) Presented for payment, but is returned due to insufficient funds being available on his current account, where,(b) In the opinion of the bank on whom the cheque is drawn, such cheque has been issued by the customer in bad faith.
Cheques falling within this system are referred to as 'dishonoured cheques'. Due regard must be given by retail banks to the general provisions of Bahrain Law regardingjoint accounts , partnership accounts and accounts in the name of corporate entities, as well as to the customer mandate in each case, to determine how such accounts may be dealt with for purposes of the Rules in this Chapter.Amended: October 2012
Amended: January 2011
October 07Procedures to be Followed
BC-5.1.2
On each occasion that a retail bank becomes aware of a dishonoured cheque of one of its customers, that bank will send a written warning to the relevant customer informing him/her of the existence of the dishonoured cheque, requesting him/her to immediately make good the insufficiency in his current account in order to clear the cheque. This written warning will also inform the customer of the provisions of this system with regard to dishonoured cheques and abusers of cheques.
Amended: October 2012
October 07BC-5.1.3
On the first working day of each calendar month, each retail bank must provide to the CBB a list of the names, supported with I.D. numbers (CPR or CR numbers (as applicable) for Bahrain
residents , Passport or CR-equivalent numbers (as applicable) for non-Bahrain residents) of those customers to whom one (or more) written warning(s) has been sent in accordance with Paragraph BC-5.1.2 above during the immediately preceding calendar month. This list should specify the number of written warnings relating to dishonoured cheques for each customer of the relevant retail bank for the month in question and shall be in the form set out in Appendix BC-1. Retail banks will be responsible for ensuring the accuracy of all details on their respective lists.Amended: October 2012
Amended: January 2011
October 07BC-5.1.4
Using the lists referred to in Paragraph BC-5.1.3 above, the CBB will prepare a further list (the 'Control List') of those customers to whom two or more written warnings were sent by any one or more retail bank
licensees at any time within a maximum period of three consecutive calendar months. The Control List, which will be in the form set out in Appendix BC-2, will specify the name and I.D. numbers of each such customer, the total number of dishonoured cheques for that customer included in the lists referred to in Paragraph BC-5.1.3 above, the name of the relevant bank(s) on whose list(s) the customer's name has been included, and other relevant details for banks' information and checking in accordance with Paragraph BC-5.1.5 below. Any customer to whom more than two written warnings relating to dishonoured cheques were sent by any one or more retail banklicensees at any time within a maximum period of three consecutive calendar months will be automatically deemed an abuser of cheques for the purposes of Paragraph BC-5.1.7 below.Amended: October 2012
Amended: January 2011
October 07BC-5.1.5
On the second working day of each calendar month, the CBB will circulate a draft copy of the Control List to all retail bank licensees. Banks will be requested to check the accuracy of the Control List by reference to the information they have sent to the CBB in accordance with Paragraph BC-5.1.3 above, and to notify the CBB within a maximum period of one week of receiving the list of any inaccuracies on the Control List. The Control List, as amended if appropriate, will be circulated to retail bank licensees by the CBB on the second working day after it receives all responses from concerned banks. Retail bank licensees will be required to monitor the customers on this Control List to establish whether any one or more of them issued another dishonoured cheque in the instant calendar month. Any bank becoming aware of a dishonoured cheque of one or more of its customers on the Control List during this month should notify the CBB of this fact, using the relevant section in Appendix BC-1, on the first working day of each calendar month.
Amended: January 2011
October 07BC-5.1.6
If the CBB does not receive any notification as contemplated in Paragraph BC-5.1.5 above for a particular customer on the Control List, that customer's name shall be withdrawn from the next issue of the Control List. However, the CBB will monitor the names of customers appearing on the Control List during the three consecutive calendar months falling immediately after the calendar month in which a customer's name is taken off the Control List. If any such customer's name is again reported to the CBB pursuant to Paragraph BC-5.1.3 above at any time during this three-month period,
(a) His name will be returned to the Control List on the date of its next issue if there is only one dishonoured cheque reported in this context; or(b) He will be automatically deemed an abuser of cheques for the purposes of Paragraph BC-5.1.7 below if there is more than one dishonoured cheque reported in this context.
If, however, his name is not reported to the CBB in this regard, the CBB will cease its monitoring thereof.Amended: January 2011
October 07BC-5.1.7
If the CBB does receive notification as contemplated in Paragraph BC-5.1.5 above for a particular customer on the Control List, or if a customer is deemed to be an abuser of cheques within Paragraph BC-5.1.4 or Paragraph BC-5.1.6 above, such customer (herein referred to as an 'abuser of cheques') will be penalised as follows. Using Appendix BC-3, on the second working day of the calendar month following the receipt of the information referred to above, the CBB will circulate a draft list to all retail bank licensees. Banks will be requested to check the accuracy of this list by reference to the information they have sent to the CBB in accordance with Paragraph BC-5.1.5 above, and to notify the CBB within a maximum period of one week of receiving the list of any inaccuracies on that list. The list, as amended if appropriate, will be circulated to retail bank licensees by the CBB on the second working day after it receives all responses from banks, and will direct the bank(s) which has/have reported an abuser of cheques to withdraw all cheque books held by that abuser of cheques, and to close such person's current account(s) by transferring any balances therein to saving and/or any other accounts held with that/those bank(s). Furthermore, that bank(s) must not provide current account facilities to that abuser of cheques for the twelve calendar month period immediately following the date of issue of the relevant list. All other banks should, within a maximum period of one month after the issue of the relevant list, also withdraw current account facilities from that abuser of cheques for the same twelve calendar month period. Retail bank licensees will be entitled to recover any amounts due to them from abusers of cheques as a result of compliance with this system by availing of their set-off rights under Bahrain Law.
Amended: January 2011
October 07BC-5.1.8
On Appendix BC-4, the CBB will notify retail bank licensees of those abusers of cheques in respect of whom the twelve calendar month period referred to in Paragraph BC-5.1.7 above has ended, and to whom banks may reinstate/offer current account facilities at their discretion.
Amended: January 2011
October 07BC-5.1.9
Nothing in this Directive shall prejudice the rights of banks against customers otherwise existing under Bahrain Law and/or under any particular bank/customer agreement. Furthermore, retail bank licensees will be entitled to the same immunity from prosecution as the CBB for any harm suffered, or alleged to be suffered, by customers as a result of banks complying with the Rules in this Chapter.
Amended: October 2012
Amended: January 2011
October 07BC-5.1.10
The Rules may be amended, in whole or in part, from time to time by the CBB. In addition, the CBB may, at its discretion and as it so deems appropriate, issue specific directions to all or any retail bank licensees regarding abusers of cheques or any particular abuser of cheques.
Amended: October 2012
Amended: January 2011
October 07BC-5.2 BC-5.2 General Guidance on Administration of Dishonoured Cheques
BC-5.2.1
Retail bank licensees that wish to issue cheque guarantee cards for an amount not exceeding BD 200 may do so, subject to informing the Director of Banking Services at the CBB of their intention and the arrangements governing the issue of such cards.
Amended: January 2011
October 07BC-5.2.2
Retail bank licensees, generally, should take steps to extend their administrative supervision and control over current account customers (in particular those who are in repeated breach of normally-accepted behaviour), and to stress to account holders the need for an appropriate level of discipline in the usage of cheques.
October 07BC-5.2.3
Retail bank licensees should exercise greater vigilance over borrowers, especially in the area of consumer finance, where such borrowers maintain their current accounts at a bank or banks other than at the lending bank.
October 07BC-5.2.4
The CBB will monitor the incidence of returned cheques on a monthly basis (as stipulated in Section BC-5.1) in order to determine the extent to which such incidence is being reduced or otherwise.
Amended: January 2011
October 07BC-5.3 BC-5.3 Penalty Charges on Dishonoured Cheques
BC-5.3.1
The CBB will impose penalty charges of BD 7 on each returned cheque for the reasons of 'Insufficient Funds', 'Refer to Drawer', 'Not Arranged For', 'Present the cheque again', and 'Account Closed'. Individual banks will continue to be informed daily of any charges accruing to their accounts. The respective accounts will be debited on the same day.
Amended: July 2017
Amended: October 2013
Amended: January 2011
October 07BC-5.3.2
[This paragraph was deleted in April 2018].
Deleted: April 2018
Amended: October 2013
October 07BC-5A BC-5A Return Policy — Post-Dated Cheques
BC-5A.1 BC-5A.1 Return Policy — Post-Dated Cheques
BC-5A.1.1
When a customer fully repays his/her credit outstanding amount in full or settles in part pursuant to a settlement agreement, the subject retail bank licensee must immediately return all holding of the customer's post-dated cheques taken as collateral or destroy such cheques and inform the customer in writing.
Added: January 2017BC-6 BC-6 Automated Teller Machines (ATM)
BC-6.1 BC-6.1 [This Section was deleted in October 2019].
BC-6.1.1
[This Paragraph was deleted in October 2019].
Deleted: October 2019
October 07BC-6.1.2
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: October 2012
Amended: January 2011
October 07General Criteria
BC-6.1.3
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: January 2011
October 07BC-6.1.4
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: January 2011
October 07BC-6.1.5
[This Paragraph was deleted in October 2019].
Deleted: October 2019
October 07BC-6.1.6
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: July 2016
Amended: April 2012
Amended: January 2011
October 07BC-6.1.7
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: January 2011
October 07BC-6.1.8
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: January 2011
October 07BC-6.1.9
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: January 2011
October 07BC-6.1.10
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Amended: April 2012
Amended: January 2011
October 07BC-6.1.11
[This Paragraph was deleted in October 2019].
Deleted: October 2019
Added: April 2012BC-6.2 BC-6.2 GCC ATM Network Charges [This Section was deleted in April 2018]
BC-6.2.1
[This paragraph was deleted in April 2018].
Deleted: April 2018
October 07BC-6.2.2
[This paragraph was deleted in April 2018].
Deleted: April 2018
October 07BC-6.2.3
[This paragraph was deleted in April 2018].
Deleted: April 2018
Amended: January 2011
October 07BC-6.3 BC-6.3 Local ATM Network Charges [This Section was deleted in April 2018]
BC-6.3.1
[This paragraph was deleted in April 2018].
Deleted: April 2018
Amended: April 2016
Added: January 2014BC-6.3.2
[This Paragraph was deleted in April 2016.]
Deleted: April 2016
Added: January 2014BC-6.3.3
[This Paragraph was deleted in April 2016.]
Deleted: April 2016
Added: January 2014BC-7 BC-7 Margin Trading System
BC-7.1 BC-7.1 Introduction
BC-7.1.1
This Chapter applies to all full commercial banks in Bahrain.
October 07BC-7.1.2
Investors purchasing
securities listed on anylicensed exchange may pay for them under the Margin Trading System ("The System") by borrowing a portion of the purchase price from a participating bank. The System is subject to relevant provisions of the CBB Law, the Rulebook of thelicensed exchange , any rules and regulations issued pursuant to such Law, Rulebook and this Module. The System applies to equities in companies listed on anylicensed exchange . Unless restrictions apply under Bahrain law in this regard, the System shall be available to Bahraini or non-Bahraini investors, whether resident or non-resident in Bahrain.Amended: January 2011
October 07BC-7.1.3
The main objective of introducing the System is to enhance the overall activity on any
licensed exchange , allowing investors to leverage their investments, in a controlled manner.Amended: January 2011
October 07General Criteria
BC-7.1.4
Only retail bank licensees will be permitted to act as participating banks for the System. Participating banks must each receive the prior general written approval of the CBB in order to take part in the System. The CBB will notify the
licensed exchange of the identity of participating banks for the System. The CBB's approval may be withdrawn at its discretion.Amended: January 2011
October 07BC-7.1.5
SRO members who are not retail banks will not be permitted to act as lenders or financiers for the System.Amended: January 2011
October 07BC-7.2 BC-7.2 Limits and Trading Rules
BC-7.2.1
An investor may, through his relationship with any participating bank under the System, invest in securities made up by way of the investor's own initial margin and by way of financing from the relevant participating bank to that investor.
Amended July 09
October 07BC-7.2.2
Such financing referred to in Paragraph BC-7.2.1 is subject to the limit on margin percentage given in Paragraph BC-7.2.10.
Amended: January 2011
Amended July 09
October 07BC-7.2.3
The amount of the margin facility made to an investor under the System shall be included as an exposure to that customer, and contribute towards the large exposures limit and the consumer finance limit for that person.
October 07BC-7.2.4
The total amount of financing granted by an individual participating bank to all investors under the System shall not, at any time exceed 15% of that participating bank's capital base, such percentage to be reviewed by the CBB at its discretion from time to time.
October 07BC-7.2.5
The CBB will require participating banks to inform the Credit Reference Bureau ('CRB') of all facility limits approved to investors under the System from time to time. Participating banks must check with the CRB on the amount of facility limits outstanding under the System at any time to a particular investor.
Amended: July 2016
Amended: January 2011
October 07SRO Members
BC-7.2.6
Only licensed
SRO members who meet the requirements to participate in the System and are authorised as such by thelicensed exhange and the CBB will be permitted to act as brokers for the System.Amended: January 2011
October 07Documentation
BC-7.2.7
Only standard-form documents (application forms and agreements) will be used for the System. Standard-form agreements, drafted and approved in advance by the
licensed exchange , will be entered into between the participating bank and the investor (in respect of financing), and between the participating bank and the investor and theSRO member (in respect of trading) and, as relevant, these agreements shall (amongst other things) confirm that:(a) The investor is borrowing or financing a stated amount from the participating bank for the purpose of taking part in the System;(b) The investor will repay such stated amount, together with any interest or charges thereon, when due and in accordance with the agreement;(c) The investor understands the risks involved in margin trading as well as the implications of the undertakings given by him;(d) The participating bank can sell the securities bought through the System if the relevant margin is called and not met, without further formalities being required;(e) TheSRO member is liable for marking thesecurities to market on a daily (or more frequent) basis and for keeping the participating bank updated as to the participating bank's exposure to the investor;(f) The investor can place orders with the broker for the purchase ofsecurities up to the limit permitted by the agreement;(g) Each party to the agreement in question shall abide by the duty of confidentiality imposed on him in relation to the matters set out in the agreement; and(h) There is an overriding obligation on the parties thereto to comply with Bahrain law in general and, in particular, with the share-ownership restrictions applying to certain types ofsecurities .Amended: January 2011
October 07Owner of the Securities bought Using the System
BC-7.2.8
For ease of transfer and sale of the
securities in the event that a margin is called by the participating bank but not met by the investor, thesecurities will be registered in the participating bank's name (for the account of the investor) and held by a custodian.Amended: January 2011
October 07BC-7.2.9
Under Paragraph BC-7.2.8 above; (a) the
securities should not be considered as part of the bank's own assets for the purposes of determining ownership/control under Bahrain law, and (b) if the investor has discharged his obligations to the participating bank under the System and thesecurities have not been sold, thesecurities shall be transferred into the legal ownership of the investor.Amended: January 2011
October 07Margin Percentage
BC-7.2.10
For equities listed on any
licensed exchange , an investor shall have the right to borrow a loan the value of which shall not exceed 50% of the total value of the funds being invested (i.e. 1:1). The CBB and thelicensed exchange shall coordinate in making any change to the margin percentages set for the System.Amended: April 2011
Amended: January 2011
October 07Margin Call Top-up
BC-7.2.11
The margin call top-up shall be 30% of the total value of the funds invested by an investor through a margin account with a participating bank. An investor shall settle a margin call on the settlement date (as determined by the BSE) by making a cash payment of such amount to the participating bank. Such cash payment may, at the investor's discretion and in whole or part, come from the sale of the
securities bought through the System, or otherwise. Failure to meet such margin call will, however, give the participating bank the right to sell thesecurities bought through the System.Amended: January 2011
October 07Margin Interest
BC-7.2.12
The participating bank shall charge a rate of interest or impose charges on the financing amount granted to the investor at a rate or on a basis to be determined by the participating bank. In the event that investor's margin account is in credit in excess of the margin applicable thereto, interest or profit shall be paid on the excess at a rate to be determined by the participating bank.
October 07BC-8 BC-8 Investment Business Activities
BC-8.1 BC-8.1 Scope of Application in Relation to Customer Categories
BC-8.1.1
This Chapter provides for two categories of
customers , and applies different levels of protection to each, depending on their level of sophistication.Added: April 2008BC-8.1.2
The scope of application of this Chapter BC-8 with regards to
customer categories is as follows:Section Subject Matter Customer Category BC-8.3 Overarching Principles All categories. BC-8.4 Customer Classification All categories. BC-8.5 Marketing and Promotion All categories; BC-8.5.3 and BC-8.5.4 apply to retail customers only. BC-8.6 Accepting Customers Retail customers only. BC-8.7 Suitability Retail customers only. BC-8.8 Disclosure of Information All categories; BC-8.8.5 to BC-8.8.12 apply to retail customers only. BC-8.9 Dealing and Managing All categories; various Rules apply to retail customers only. BC-8.10 Reporting to Customers All categories. BC-8.11 Complaints All categories. BC-8.12 Conflicts of Interest All categories. BC-8.13 Appendix All categories; various Paragraphs apply to retail customers only.
Added: April 2008Overseas Branches and Subsidiaries
BC-8.1.3
Locally incorporated
conventional bank licensees must ensure that their branches and subsidiaries operating in foreign jurisdictions comply, at a minimum, with local conduct of business standards and regulatory requirements (where applicable).Added: April 2008BC-8.1.4
For branches of foreign banks located in Bahrain, these requirements only apply to the business and
customers of the Bahrain branch.Amended: January 2011
Added: April 2008BC-8.1.5
The CBB encourages locally incorporated
conventional bank licensees to apply — with respect to their overseas branches and subsidiaries — conduct of business standards at least equivalent to those set out in this Module. Where this is not the case, then the CBB will consider any potential risk to theconventional bank licensee that may arise through adverse reputational or other consequences.Amended: January 2011
Added: April 2008BC-8.2 BC-8.2 General Rules
BC-8.2.1
This Module applies to the
regulated banking services listed in Subparagraphs LR-1.3.1 (h to l) of allconventional bank licensees .Amended: April 2012
Amended: January 2011
Added: April 2008BC-8.2.2
This Module aims to encourage high standards of business conduct, which are broadly applicable to all
conventional bank licensees , allregulated banking services referred to in Paragraph BC-8.2.1, and all types ofcustomers . The CBB, nevertheless, recognises thatcustomers ' level of sophistication and understanding of risks underlying financial instruments vary. Accordingly, the level of safeguards provided for in the business conduct requirements forretail customers , for instance, are different from those for accredited investors.Amended: January 2011
Added: April 2008BC-8.2.3
This Chapter comprises a number of overarching principles of business conduct, with respect to the conduct of
regulated banking services byconventional bank licensees ; these cover the various stages of the life of acustomer relationship.Added: April 2008BC-8.2.4
Conventional bank licensees must maintain adequate records to demonstrate compliance with the requirements in this Chapter.Added: April 2008BC-8.2.5
The CBB will monitor compliance with this Chapter. If required, the CBB may develop more detailed rules and guidance to supplement the existing IBCP.
Added: April 2008BC-8.3 BC-8.3 Overarching Principles
BC-8.3.1
In the course of offering
regulated banking services listed in Paragraph BC-8.2.1, licensees must:(a) Act with due skill, care and diligence in all dealings withcustomers ;(b) Act fairly and reasonably in all dealings withcustomers ;(c) Identifycustomers' specific requirements in relation to the products and services about which they are enquiring;(d) Ensure that any advice tocustomers is aimed at thecustomers' interests and based on adequate standards of research and analysis;(e) Provide sufficient information to enablecustomers to make informed decisions when purchasing investment products and services offered to them;(f) Provide sufficient and timely documentation tocustomers to confirm that their investment arrangements are in place and provide all necessary information about their products, rights and responsibilities;(g) Maintain fair treatment ofcustomers through the lifetime of thecustomer relationships, and ensure thatcustomers are kept informed of important events;(h) Ensure complaints fromcustomers are dealt with fairly and promptly;(i) Ensure that all information provided tocustomers is clear, fair and not misleading, and appropriate tocustomers' information needs; and(j) Take appropriate measures to safeguard any money and property handled on behalf ofcustomers and maintain confidentiality ofcustomer information.Amended: January 2011
Added: April 2008BC-8.3.2
The Rules contained in Chapter BC-8 are largely principles-based and focus on desired outcomes rather than on prescribing detailed measures to achieve those outcomes. This gives
conventional bank licensees flexibility in how to implement the basic standards prescribed in this Module.Added: April 2008BC-8.4 BC-8.4 Customer Classification
BC-8.4.1
A
conventional bank licensee must classify the persons with or for whom it intends to carry onregulated banking services listed in Paragraph BC-8.2.1, in accordance with the requirements in this Section, and communicate its classification to the person concerned. The customer must be notified of his/her customer classification before any documentation is finalised or whereregulated banking services or products listed in Paragraph BC-8.2.1 are offered.Amended: January 2011
Added: April 2008BC-8.4.2
The purpose of the classification is to ensure that
conventional bank licensees ’customers are appropriately categorised so that regulatory protections are focused on those classes ofcustomer that need them most: The following wording may be used forcustomer notification of status. ‘According to the Central Bank of Bahrain Rulebook, we are required to notify all customers of their status for the purpose of investment business and certain regulated banking services. For the purpose of this relationship, you are classified as an accredited investor/retail customer.’Added: April 2008BC-8.4.3
Before conducting
regulated banking services listed in Paragraph BC-8.2.1 with or for anyperson , aconventional bank licensee must take reasonable steps to obtain appropriate information to establish whether thatperson is an accredited investor or aretail customer .Amended: January 2011
Added: April 2008BC-8.4.4
The treatment of a
conventional bank licensee ’scustomers must be in accordance with the classification it has established for the purpose of Rule BC-8.4.3.Added: April 2008BC-8.4.5
Where specific rules do not exist for a particular class of
customers , the CBB requires appropriate treatment in accordance with the overarching principles set forth in Section BC-8.3.Added: April 2008Accredited Investors
BC-8.4.6
For the purpose of Rule BC 8.4.3, an
accredited investor includes:(a) Individuals holding financial assets (either singly or jointly with their spouse) of USD 1,000,000 or more;(b) Companies, partnerships, trusts or other commercial undertakings, which have financial assets available for investment of not less than USD 1,000,000; or(c) Governments, supranational organisations, central banks or other national monetary authorities, and state organisations whose main activity is to invest infinancial instruments (such as state pension funds).Amended: January 2011
Added: April 2008BC-8.4.7
Conventional bank licensees must notify acustomer (that is not licensee of the CBB or a licensed financial institution in a foreign country) in writing, that he is being classified as anaccredited investor and provide a written warning that he will not benefit from the specific protections afforded to retail investors.Amended: January 2011
Added: April 2008BC-8.4.8
Persons classified as
accredited investors under Rule BC-8.4.6 may, however, request treatment asretail customers where the concerned product is a listed security or is retail in nature, in which caseconventional bank licensees must agree to treat them asretail customers .Amended: January 2011
Added: April 2008BC-8.4.9
A
retail customer , as defined in Rule BC-8.4.10, may voluntarily elect to be treated as anaccredited investor . In this instance theconventional bank licensee must obtain a signed declaration to that effect prior to any provision ofregulated banking services .Added: April 2008Retail Customer
Records
BC-8.4.11
A
conventional bank licensee must make a record of the classification established for eachcustomer , including sufficient information to support such classification.Added: April 2008BC-8.5 BC-8.5 Marketing and Promotion
BC-8.5.1
The requirements of this section apply to product specific or service specific material and not to general brand awareness promotional material.
Added: April 2008BC-8.5.2
Conventional bank licensees must ensure that all advertising and promotional material that is sent to any class ofcustomer is fair, clear and not misleading.Added: April 2008BC-8.5.3
With respect to
retail customers , in ensuring that the description of the product or the service in the promotional material is fair, clear and not misleading, theconventional bank licensee should, among other precautionary measures, ensure that:a) The purpose, and to the extent practicable, the content, of the information or communication are likely to be understood by the average member of the group to whom the communication is addressed;b) Key items contained in the information are given due prominence;c) The method of presentation in the information does not disguise, diminish, or obscure important risks, warnings or information; andd) The communication does not omit information that is material to ensure it is fair, clear and not misleading.Added: April 2008BC-8.5.4
In ensuring that the description of the product or the service in the promotional material is fair, the
conventional bank licensee should avoid exaggerating the potential benefits of the investment service orfinancial instrument in any communication with aretail customer or potentialretail customer .Added: April 2008BC-8.5.5
In ensuring that the description of the product or the service in relation to promotional material directed at
retail customers is adequate, theconventional bank licensee should: ensure that the promotional material contains a balanced description of the main characteristics of thefinancial instrument and/or service state it relates, including the nature of the financial commitment and risks involved; whether or not thefinancial instruments involved are illiquid, and traded in a recognised exchange or market; the existence or absence of any right of withdrawal or cancellation and, where such a right exists, its duration and the conditions for exercising it, including information on any amount that theretail customer may be required to pay to exercise that right; and state if the communication relates to afinancial instrument or service of a person other than theconventional bank licensee , the name of the person.Added: April 2008BC-8.5.6
Conventional bank licensees must ensure that the accuracy of all material statements of fact in promotional materials is supported by adequate evidence.Added: April 2008BC-8.5.7
Conventional bank licensees must not, in any form of communication with an individualcustomer or any class ofcustomer , unreasonably attempt to limit or avoid any duty or liability it may have to that individualcustomer or class ofcustomer in relation toregulated banking services , unless otherwise agreed in writing by both parties.Added: April 2008BC-8.5.8
An example of an unreasonable attempt to limit liability is where a financial product is given protection or compensation status in its home country and such status is not given by the Bahrain Bank (or branch) to its customers.
Added: April 2008BC-8.5.9
Conventional bank licensees that underwrite or marketpublic offerings must ensure that their promotional material complies with the relevant capital markets disclosure standards of the CBB.Added: April 2008BD-8.5.10
Capital markets disclosure standards are currently contained in the Disclosure Standards Regulation of 3 December 2003.
Added: April 2008Content of Promotions
BC-8.5.11
Before a
conventional bank licensee communicates any promotional material on a specific product or service to acustomer or a potentialcustomer it must ensure that the promotional material at the very least contains the information laid out in Paragraph BC-8.13.1.Added: April 2008BC-8.5.12
Conventional bank licensees must not make use of the name of the CBB in anypromotion in such a way that would indicate endorsement or approval of its products or services.Added: April 2008BC-8.5.12A
For greater certainty, notification in promotion material that a bank is licensed by the CBB is not regarded as endorsement or approval by the CBB of any products or services being offered by the bank and does not contravene the requirements of Paragraph BC-8.5.12.
Added: July 2012Records
BC-8.5.13
Conventional bank licensees must maintain a record of all promotional materials issued by them or on their behalf.Added: April 2008Real Time Promotions
BC-8.5.14
Conventional bank licensees must not make areal time promotion to retail customers unless the concernedcustomer has been notified of the fact in advance and has agreed in writing to receivereal time promotions .Added: April 2008BC-8.5.15
For the purposes of Paragraph BC-8.5.14, a
real time promotion is a promotion made in the course of a personal visit, telephone conversation or other interactive dialogue.Added: April 2008BC-8.5.16
Consent to receive
real time promotions could be, for instance, at the time of the initial customer profiling, by means of signing a form clearly indicating such consent.Added: April 2008BC-8.5.17
A representative of the
conventional bank licensee must, on making contact for the first time with acustomer , and again at any time when asked to do so by thecustomer :(a) Identify himself as being a representative of theconventional bank licensee ;(b) State the name of theconventional bank licensee ; and(c) Present thecustomer with a business card on meeting thatcustomer , unless he has given him such a card at a previous meeting. The business card must include a statement of theconventional bank licensee's licensing status.Amended: October 2010
Added: April 2008BC-8.5.18
For the purposes of Rule BC-8.5.17(c), the statement on the business card should make clear the licensing status of the
conventional bank licensee ; however it should not lead the customer to believe that the product being offered has been approved by the CBB. The suggested wording for the statement of licensing status is as follows: "Licensed as a conventional retail /wholesale bank by the CBB".Amended: October 2010
Added: April 2008BC-8.5.19
In oral communications with a
retail customer , whether in person or by telephone, the representative of theconventional bank licensee must:
(i) Conduct himself in a polite manner and respect the wishes of thecustomer ;(ii) State the genuine purpose of the call at the commencement of the conversation;(iii) Ascertain whether or not thecustomer wishes him to proceed with the conversation if the time of the conversation was not previously agreed by thecustomer ;(iv) Explain clearly thefinancial instruments or other services which he is authorised to arrange;(v) Recognise and respect the right of thecustomer to terminate the call at any time; and(vi) If he requests another appointment and thecustomer refuses, shall accept that refusal courteously and in such a manner as to cause no embarrassment to thecustomer .Added: April 2008Records
BC-8.5.20
Conventional bank licensees must keep sufficient records ofreal time promotions made by them, or on their behalf by other persons, for CBB’s supervision purposes.Added: April 2008BC-8.5.21
These records should include evidence that
customers have been notified in advance and agreed to receivereal time promotions , as required under Rule BC-8.5.14.Added: April 2008BC-8.6 BC-8.6 Accepting Customers
Applicability
BC-8.6.1
This Section applies to
retail customers only.Added: April 2008Terms of Business
BC-8.6.2
Conventional bank licensees must provide theirretail customers with theirterms of business , setting out the basis on which theregulated banking services are to be conducted (see also Paragraph BC-8.8.13).Amended: January 2011
Added: April 2008BC-8.6.3
The
terms of business in relation to providingregulated banking services as defined in Paragraph BC-8.2.1 to aretail customer must take the form of acustomer agreement .Amended: January 2011
Added: April 2008BC-8.6.4
The
terms of business must include the rights and obligations of parties to the agreement, as well as other terms relevant to theregulated banking services . Theterms of business must include, but are not limited to, the items included in Paragraph BC-8.13.2.Added: April 2008BC-8.6.5
An application form in relation to
regulated banking services will be deemed to be acustomer agreement , provided the form includes the principal terms and conditions of the service, such that thecustomer is provided sufficient information to allow him to understand the basis on which the service is to be conducted.Added: April 2008BC-8.6.6
The
customer agreement must be provided in good time prior to providing theregulated banking service .Added: April 2008BC-8.6.7
For the purposes of Rule BC-8.6.6, ‘good time’ should be taken to mean sufficient time to enable the
customer to consider properly the service orfinancial instrument on offer before he is bound.Added: April 2008Customer Understanding and Acknowledgement
BC-8.6.8
Conventional bank licensees must not enter into acustomer agreement unless they have taken reasonable care to ensure that theirretail customer has had a proper opportunity to consider the terms.Added: April 2008BC-8.6.9
Conventional bank licensees must obtain theirretail customer ’s consent to the terms of thecustomer agreement as evidenced by a signature or an equivalent mechanism.Added: April 2008BC-8.6.10
The equivalent mechanism refers to instances where a
customer may have signed a mandate letter or other document accompanying the terms of thecustomer agreement .Added: April 2008BC-8.6.11
The
customer agreement must contain the signatures of both parties to the agreement. If the agreement is signed by only thecustomer (in case it is in the form of an application), copies of the signed agreement must be provided by theconventional bank licensee to thecustomer .Added: April 2008Records
BC-8.6.12
Conventional bank licensees must keep sufficient records ofcustomer agreements and any documents referred to in thecustomer agreement as soon as the agreement comes into force, for CBB’s supervision purposes.Added: April 2008BC-8.6.13
Detailed record-keeping requirements are contained in Module GR (General Requirements) and Module FC (Financial Crime).
Added: April 2008BC-8.7 BC-8.7 Suitability
Applicability
BC-8.7.1
This Section applies to
retail customers only.Added: April 2008Information and Communication
BC-8.7.2
Conventional bank licensees must seek information from theirretail customers (and potentialretail customers about their needs, circumstances and investment objectives (including their risk appetite), relevant to the services to be provided.Added: April 2008BC-8.7.3
For the purposes of Rule BC-8.7.2, the
conventional bank licensee , when providing theregulated investment services , should ask thecustomer or potentialcustomer to provide information regarding his knowledge and experience in the investment field relevant to the specific type offinancial instrument or service offered or demanded so as to enable the licensee to assess whether the financial instrument or service is appropriate to thecustomer . The evaluation of thecustomer's needs, circumstances and investment objectives (including risk appetite) can be done through a structured questionnaire.Amended: January 2011
Added: April 2008BC-8.7.4
For the purposes of satisfying the requirement under Rule BC-8.7.2,
conventional bank licensees must ensure that the information and facts they hold about theircustomers are accurate, complete and up to date.Added: April 2008BC-8.7.5
Where a
conventional bank licensee is managingfinancial instruments for acustomer , it must periodically assess whether thecustomer ’s portfolio or account remains suitable over the lifetime of thecustomer relationship and advise thecustomer if it is no longer suitable.Added: April 2008BC-8.7.6
Where a
conventional bank licensee has pooled acustomer ’s assets with those of others, with a view to taking common discretionary management decisions, theconventional bank licensee must take reasonable steps to ensure that the transaction is suitable for the relatedcustomers having regard to their stated investment objectives.Added: April 2008Records
BC-8.7.7
Conventional bank licensees must keep a record of each recommendation made toretail customers , and be able to demonstrate to the CBB compliance with this Section.Added: April 2008BC-8.8 BC-8.8 Disclosure of Information
Applicability
BC-8.8.1
This Section applies to
conventional bank licensees in relation to their dealings with all categories ofcustomers , except when stated otherwise.Added: April 2008Initial Disclosure Requirement
BC-8.8.2
A
conventional bank licensee must provide (with respect toregulated banking services ), comprehensible information tocustomers or potentialcustomers on:
a) Itself and the types of services that it can provide;b) Whether it is acting as agent or principal;c) Fees, costs and associated charges payable by the customer such as:i. The basis or amount of its charges, remuneration and commission for conducting regulated financial services andii. The nature or amount of any other income receivable by it or, to its knowledge, by its associate and attributable to thatregulated banking service ;d)Financial instruments and proposed strategies and appropriate guidance on and warnings of the risks associated with thosefinancial instruments and strategies; ande) Information about methods of redress.Added: April 2008BC-8.8.3
The purpose of Paragraph BC-8.8.2 is to ensure that
customers are reasonably able to understand the nature and risks of the investment service and type offinancial instrument that is being offered and, consequently, to take investment decisions on an informed basis. This information may be provided in standard format.Amended: January 2011
Added: April 2008Risks
BC-8.8.4
Conventional bank licensees must disclose adequate information to all classes ofcustomers about risks underlying thefinancial instrument that are not readily apparent and which relate to theregulated banking service being provided.Added: April 2008BC-8.8.5
Without prejudice to the scope of the requirement under Rule BC-8.8.2(c), conventional bank licensees must provideretail customers with appropriate guidance on, and warnings of, relevant risks when providingregulated banking services , in relation to:
(a) Transactions in illiquidfinancial instruments ;(b) Leveraged transactions, including asset portfolios or collective investment schemes that have embedded leverage;(c)Financial instruments subject to high volatility in normal market conditions;(d) Securities repurchase agreements or securities lending agreements;(e) Transactions which involve credit, margin payments, or deposit of collateral;(f) Transactions involving material foreign exchange risk;(g) Interests in real estate; and/or(h) Islamicfinancial instruments .Amended: January 2011
Added: April 2008BC-8.8.6
In relation to transactions involving warrants or derivatives,
conventional bank licensees must provideretail customers with a written statement that includes explanations of their characteristics, in particular their leverage effect, liquidity and price volatility.Added: April 2008BC-8.8.7
To satisfy Rule BC-8.8.6, with respect to warrants,
conventional bank licensees should provideretail customers with a statement that includes, at a minimum, the information contained in Paragraph BC-8.13.3.Added: April 2008BC-8.8.8
To satisfy Rule BC-8.8.6, with respect to futures contracts,
conventional bank licensees should provideretail customers with a statement that includes, at a minimum, the information contained in Paragraph BC-8.13.4.Added: April 2008BC-8.8.9
To satisfy Rule BC-8.8.6, with respect to option transactions,
conventional bank licensees should provide retail customers with a statement that includes, at a minimum, the information contained in Paragraphs BC-8.13.5 and BC-8.13.6.Added: April 2008BC-8.8.10
In relation to a transaction in a
financial instrument that is not readily realisable,conventional bank licensees must:
(a) Warn theretail customer that there is a restricted market for suchfinancial instruments , and that it may therefore be difficult to deal in thefinancial instrument or to obtain reliable information about its value; and(b) Disclose any position knowingly held by theconventional bank licensee or any of its associates in thefinancial instrument or in a relatedfinancial instrument .Added: April 2008BC-8.8.11
The risk warning given to a
retail customer or potentialretail customer must be given due prominence in all related materials and must not be concealed or masked in any way by the wording, design or format of the information provided.Added: April 2008BC-8.8.12
Risk warnings provided to a
retail customer or potentialretail customer about warrants or derivatives must make clear that the instrument can be subject to sudden and sharp falls in value. Where theretail customer may not only lose his entire investment but may also be required to pay more later, he must also be warned about this fact and the possible obligation to provide extra funding.Added: April 2008Cancellations and Withdrawals
BC-8.8.13
Conventional bank licensees must disclose in their terms of business the existence or absence of a right to cancel as per the provisions of Paragraph BC-8.6.2.Added: April 2008BC-8.8.14
Conventional bank licensees must pay due regard to the interests of theircustomers and treat them fairly.Added: April 2008Records
BC-8.8.15
Conventional bank licensees must keep a record of statements issued in compliance with Rule BC-8.8.6, and of other information or recommendations provided to theircustomers , and be able to demonstrate to the CBB compliance with this Section.Added: April 2008BC-8.9 BC-8.9 Dealing and Managing
BC-8.9.1
Conventional bank licensees must apply the requirements contained in this Section to allcustomer categories.Added: April 2008Best and Timely Execution
BC-8.9.2
Conventional bank licensees must take all reasonable steps to obtain, when executing orders, the best possible result forcustomers taking into account price, costs, speed, likelihood of execution and settlement, and any other consideration relevant to the execution of the order (subject to Paragraph BC-8.9.5 below).Amended: January 2011
Added: April 2008BC-8.9.3
Conventional bank licensees must establish and implement effective arrangements for complying with Rule BC-8.9.2 including:
a) Execution policies for each class offinancial instrument ;b) Maintenance of and disclosure tocustomers of information regarding execution venues and arrangements for disclosure tocustomers if orders are to be executed outside regulated markets;c) Monitoring of effectiveness of the order execution arrangements and execution policies in order to identify and, where appropriate, correct any deficiencies; andd) Maintenance of audit trails to demonstrate to theircustomers that orders were executed in accordance with the relevant execution policy.Added: April 2008BC-8.9.4
Conventional bank licensees are not required to provide best execution (as defined in Paragraph BC-8.9.5 below) where they have agreed with thecustomer in writing that they will not provide best execution.Amended: January 2011
Added: April 2008BC-8.9.5
In determining whether a
conventional bank licensee has taken reasonable care to provide the best overall price for acustomer in accordance with Rules BC-8.9.2 to BC-8.9.4, the CBB will take into account whether anconventional bank licensee has:
(a) Executed orders promptly and sequentially;(b) Discounted any fees and charges previously disclosed to thecustomer ;(c) Disclosed the price at which an order is executed; and(d) Taken into account the available range of price sources for the execution of itscustomers ’ transactions. In the case where theconventional bank licensee has access to prices of different regulated financial markets or alternative trading systems, it must execute the transaction at the best overall price available having considered other relevant factors.Added: April 2008BC-8.9.6
Conventional bank licensees may only postpone the execution of a transaction if it is in the best interests of thecustomer , and the prior consent of thecustomer has been given, or when circumstances are beyond its control. Theconventional bank licensee must maintain a record of all postponements together with the reasons for the postponement.Added: April 2008BC-8.9.7
Factors relevant to whether the postponement of an existing
customer order may be in the best interests of thecustomer include where:
(a) Thecustomer order is received outside of normal trading hours;(b) A foreseeable improvement in the level of liquidity in thefinancial instrument is likely to enhance the terms on which theconventional bank licensee can execute the order; or(c) Executing the order as a series of partial executions over a period of time is likely to improve the terms on which the order as a whole is executed.Added: April 2008Non-market Price Transactions
BC-8.9.8
Conventional bank licensees must not enter into a non-market price transaction in any capacity, with or for acustomer , if it has reasonable grounds to suspect that thecustomer is entering into the transaction for an illegal or improper purpose.Added: April 2008BC-8.9.9
For the purposes of Paragraph BC-8.9.8, a non-market price transaction is one where the price paid by the
conventional bank licensee , or itscustomer , differs from the prevailing market price. With respect to transactions infinancial instruments traded on alicensed exchange , licensees are reminded that in Bahrain the law prohibits off-market transactions.Amended: January 2011
Added: April 2008BC-8.9.10
For the purposes of Paragraph BC-8.9.8, examples of improper purposes for transactions include:
(a) The perpetration of a fraud;(b) The disguising or concealment of the nature of a transaction or of profits, losses or cash flows;(c) Transactions which amount to market abuse;(d) High-risk transactions under the Anti Money Laundering Regulations; and(e) "Window dressing", in particular around the year end, to disguise the true financial position of the person concerned.Added: April 2008BC-8.9.11
Rule BC-8.9.8 does not apply to a non-market-price transaction if it is subject to the rules of a recognised investment exchange.
Added: April 2008Aggregation and Allocation
BC-8.9.12
Conventional bank licensees may only aggregate an order for acustomer with an order for other customers, or with an order for its own account, where:
(a) It is unlikely that the aggregation will disadvantage thecustomers whose orders have been aggregated; and(b) It has disclosed to eachcustomer concerned in writing that it may aggregate orders, where these work to the customer’s advantage.Added: April 2008BC-8.9.13
If a
conventional bank licensee has aggregated orders ofcustomers , it must make a record of the intended basis of allocation and the identity of eachcustomer before the order is effected (subject to the "best execution" provisions of Paragraph BC-8.9.2).Amended: January 2011
Added: April 2008BC-8.9.14
Where an allocation takes place, prices must not be changed. The order must be allocated equally so that no customer or broker is advantaged over any change.
Amended: April 2013
Added: April 2008BC-8.9.15
Conventional bank licensees must have written policies on aggregation and allocation which are consistently applied; these must include the policy that will be adopted when only part of the aggregated order has been filled.Added: April 2008BC-8.9.16
Where a
conventional bank licensee has aggregated acustomer order with an order for othercustomers or with an order for its own account, and part or all of the aggregated order has been filled, it must:
(a) Promptly allocate thefinancial instruments concerned;(b) Allocate thefinancial instruments in accordance with its stated policy;(c) Ensure the allocation is done fairly and uniformly by not giving undue preference to itself or to any of those for whom it dealt;(d) Give priority to satisfyingcustomer orders where the aggregation order combines acustomer order and an own account order, if the aggregate total of all orders cannot be satisfied, unless it can demonstrate on reasonable grounds that without its own participation it would not have been able to execute those orders on such favourable terms, or at all; and(e) Make and maintain a record of:(i) The date and time of the allocation;(ii) The relevantfinancial instruments ;(iii) The identity of eachcustomer concerned;(iv) The amount allocated to eachcustomer and to theconventional bank licensee ; and(v) The price of eachfinancial instrument and allocation.Amended: April 2013
Added: April 2008Excessive Dealing
BC-8.9.17
Conventional bank licensees must not advise anycustomer to transact with a frequency or in amounts that might result in those transactions being deemed excessive in light of historical volumes, market capitalisation, customer portfolio size and related factors. This Rule does not apply tocustomers classified asmarket counterparties .Added: April 2008Right to Realise a Retail Customer's Assets
BC-8.9.18
Conventional bank licensees must not realise aretail customer ’s assets, unless it is legally entitled to do so, and has either:
(a) Set out in the terms of business:(i) The action it may take to realise any assets of theretail customer ;(ii) The circumstances in which it may do so;(iii) The asset (if relevant) or type or class of asset over which it may exercise the right; or(b) Given theretail customer written or oral notice of its intention to exercise its rights before it does so.Added: April 2008Margin Requirements
BC-8.9.19
Before conducting a transaction with or for a
retail customer ,conventional bank licensees must notify thecustomer of:
(a) The circumstances in which thecustomer may be required to provide any margin;(b) The form in which the margin may be provided;(c) The steps theconventional bank licensee may be required or entitled to take if thecustomer fails to provide the required margin, including:(i) The fact that thecustomer 's failure to provide margin may lead to theconventional bank licensee closing out his position after a time limit specified by the firm;(ii) The circumstances in which theconventional bank licensee will have the right or duty to close out thecustomer 's position; and(iii) The circumstances, other than failure to provide the required margin, that may lead to theconventional bank licensee closing out thecustomer ’s position without prior reference to him.Added: April 2008BC-8.9.20
Conventional bank licensees must close out aretail customer 's open position if thatcustomer has failed to meet a margin call within a maximum of five business days following the date on which the obligation to meet the call accrues, unless:(a) Theconventional bank licensee has received confirmation from a relevant third party (such as a clearing firm) that theretail customer has given instructions to pay in full; or(b) Theconventional bank licensee has taken reasonable care to establish that the delay is owing to circumstances beyond theretail customer 's control.Amended: January 2011
Added: April 2008BC-8.9.21
For the purposes of Rule BC-8.9.20,
conventional bank licensees may require the closing of aretail customer ’s open position in less than five business days, for their own risk management purposes.Added: April 2008BC-8.9.22
Conventional bank licensees must also follow the requirements of Chapter BC-7 concerning the operation of the margin trading system.Amended: January 2011
Added: April 2008Programme Trading
BC-8.9.23
Before a
conventional bank licensee executes a programme trade, it must disclose to itscustomer whether it will be acting as a principal or agent. Aconventional bank licensee must not subsequently act in a different capacity from that which is disclosed without the prior consent of thecustomer .Added: April 2008BC-8.9.24
The term ‘programme trade’ describes a single transaction or series of transactions executed for the purpose of acquiring or disposing of, for a
customer , all or part of a portfolio or a large basket offinancial instruments .Added: April 2008BC-8.9.25
Conventional bank licensees must ensure that neither they, nor an associate, execute an own account transaction in anyfinancial instrument included in a programme trade, unless they have notified thecustomer in advance that they may do this, or can otherwise demonstrate that they have provided fair treatment to thecustomer concerned.Added: April 2008Records
BC-8.9.26
Conventional bank licensees must keep a record of each step they undertake in relation to each transaction to demonstrate to the CBB compliance with Section BC-8.9.Added: April 2008BC-8.10 BC-8.10 Reporting to Customers
BC-8.10.1
Section BC-8.10 applies to all
customer categories.Added: April 2008Confirmation of Transactions
BC-8.10.2
When a
conventional bank licensee executes a transaction in afinancial instrument for acustomer on a specific order, it must establish procedures to keep the customer informed of the essential details of the transaction and essential information regarding the carrying out of his order.Added: April 2008BC-8.10.3
For the purposes of Rule BC-8.10.2, the essential details of the transaction and essential information regarding the carrying out of the order include:
(a) Execution price;(b) Charges; and(c) Date of execution.Added: April 2008Periodic Statements
BC-8.10.5
Conventional bank licensees must promptly and at suitable intervals provide theircustomers with a written statement when they:
(a) Undertake the activity of managingfinancial instruments ; or(b) Operate acustomer 's account containingfinancial instruments .Added: April 2008BC-8.10.6
Conventional bank licensees must provide a periodic statement:
(a) Monthly, if thecustomer is aretail customer and theretail customer's portfolio includes derivative transactions in highly volatile classes offinancial instruments or leveraged transactions; or(b) At least every six months in other cases.Amended: July 2012
Added: April 2008BC-8.10.7
Periodic statements, issued in accordance with Rule BC-8.10.6, must contain, at the very least, the information contained in Paragraph BC-8.13.8, as at the end of the period covered.
Amended: January 2011
Added: April 2008BC-8.10.8
Where a
conventional bank licensee undertakes the activity of managingfinancial instruments on a discretionary basis, the periodic statements, issued in accordance with Rule BC-8.10.6, must also include at the very least the information included in Paragraph BC-8.13.9.Amended: January 2011
Added: April 2008BC-8.10.9
In addition to Rules BC-8.10.7 and BC-8.10.8, where the
retail customer may not only lose his entire investment but may also be required to pay more later,conventional bank licensees must also include the additional information included in Paragraph BC-8.13.10.Added: April 2008Records
BC-8.10.10
Conventional bank licensees must immediately record the essential elements of all orders that are received.Added: April 2008BC-8.10.11
For the purposes of Rule BC-8.10.10, essential elements of orders received include the particulars of the
customer and order, time, price of execution, and number of instruments.Added: April 2008BC-8.10.12
Conventional bank licensees must record the essential elements of all:(a) Orders executed;(b) Transactions executed for their own account;(c) Non-market price transactions entered into by theconventional bank licensee ; and(d) Orders that have been aggregated with their basis of allocation.Added: April 2008BC-8.10.13
For purposes of Rule BC-8.10.12,
conventional bank licensees should include, at the very least, the information provided in Paragraph BC-8.13.9.Added: April 2008BC-8.10.14
Conventional bank licensees must make a copy of any confirmation of a transaction or periodic statement provided to acustomer , and retain it for at least five years from the date on which it was provided.Added: April 2008BC-8.11 BC-8.11 [This section was deleted in October 2011]
BC-8.11.1
[This paragraph was deleted in October 2011]
Deleted: October 2011
Added: April 2008BC-8.11.2
[This paragraph was deleted in October 2011]
Deleted: October 2011
Added: April 2008BC-8.11.3
[This paragraph was deleted in October 2011]
Deleted: October 2011
Added: April 2008[Deleted]
Deleted: October 2011BC-8.11.4
[This paragraph was deleted in October 2011]
Deleted: October 2011
Added: April 2008BC-8.11.5
[This paragraph was deleted in October 2011]
Deleted: October 2011
Added: April 2008BC-8.12 BC-8.12 Conflicts of Interest
BC-8.12.1
Conventional bank licensees must undertake all reasonable steps to identify conflicts of interest between themselves (or any person directly or indirectly linked to them by control) and theircustomers , which may arise in the course of providing aregulated banking service .Added: April 2008BC-8.12.2
Where conflicts arise,
conventional bank licensees must:
(a) Disclose any material interest or conflict of interest to thecustomer in writing (which may include a disclosure in theconventional bank licensee ’s terms of business) either generally or in relation to a specific transaction, and take reasonable steps to ensure that thecustomer does not object;(b) Establish information barriers between activities such as proprietary trading, portfolio management and corporate finance business; and(c) Produce a written policy of independence, which requires an employee to disregard any conflict of interest or material interest when advising acustomer or exercising discretion.Added: April 2008BC-8.12.3
If a
conventional bank licensee determines that it is unable to manage a conflict of interest or material interest using one of the methods described in Rule BC-8.12.2 it must decline to act for thecustomer .Added: April 2008Personal Account Transactions
BC-8.12.4
Conventional bank licensees must establish and maintain adequate policies and procedures, to ensure that:
(a) Employees involved with advising and arranging do not undertake a personal account transaction unless:(i) Theconventional bank licensee has, in a written notice, drawn to the attention of the employee the conditions upon which the employee may undertakepersonal account transactions and that the contents of such a notice are made a term of his contract of employment or services;(ii) Theconventional bank licensee has given its written permission to that employee for that transaction or to transactions generally infinancial instruments of that kind; and(iii) The transaction will not conflict with theconventional bank licensee ’s duties to itscustomers ;(b) It receives prompt notification or is otherwise aware of each employee’spersonal account transactions ; and(c) If an employee’spersonal account transactions are conducted with theconventional bank licensee , each employee’s account must be clearly identified and distinguishable from othercustomers ’ accounts.Added: April 2008BC-8.12.5
The written notice in sub-Paragraph BC-8.12.4 (a)(i) must make it explicit that, if an employee is prohibited from undertaking a
personal account transaction , he must not, except in the proper course of his employment:
(a) Procure another person to enter into such a transaction; or(b) Communicate any information or opinion to another person if he knows, or ought to know, that the person will as a result, enter into such a transaction or procure some other person to do so.Added: April 2008BC-8.12.6
Where a
conventional bank licensee has taken reasonable steps to determine that an employee will not be involved to any material extent in, or have access to information about, theconventional bank licensee ’s investment business, then the conditions or restrictions onpersonal account transactions , in Rule BC-8.12.4, need not be applied to that employee.Added: April 2008BC-8.12.7
Conventional bank licensees must establish and maintain procedures and controls so as to ensure that aninvestment analyst does not undertake apersonal account transaction in afinancial instrument if theinvestment analyst is preparing investment research:
(a) On that investment or its issuer; or(b) On a related investment, or its issuer;
until theinvestment research is published or made available to theconventional bank licensee ’s customers.Added: April 2008Investment Research
BC-8.12.8
Where a
conventional bank licensee issuesinvestment research , its conflict of interest policy must specify the types ofinvestment research issued by it. Aconventional bank licensee that prepares and publishes investment research must have adequate procedures and controls to ensure:
(a) The effective supervision ofinvestment analysts by following at the very least the items listed in Paragraph BC-8.13.11;(b) That any actual or potential conflicts of interest are managed in accordance with Rule BC-8.12.1; and(c) That the investment research issued tocustomers is not biased.Added: April 2008BC-8.12.9
Conventional bank licensees that publishinvestment research must take reasonable steps to ensure that theinvestment research :
(a) Identifies the types ofcustomers for which it is principally intended;(b) Distinguishes fact from opinion or estimates, and includes references to sources of data used;(c) Specifies the date when it was first published;(d) Specifies the period the ratings or recommendations are intended to cover;(e) Contains a clear and unambiguous explanation of the rating or recommendation system used;(f) Includes a price chart or line graph depicting the performance of thefinancial instrument for the period that theconventional bank licensee has assigned a rating or recommendation for thatfinancial instrument , which must also show the dates on which the ratings were revised; and(g) Includes a distribution of the different ratings or recommendations, in percentage terms:(i) For allfinancial instruments in respect of which theconventional bank licensee publishes investment research; and(ii) Forfinancial instruments , if any, where theconventional bank licensee has undertaken corporate finance business with or for the issuer over the past 12 months.Added: April 2008BC-8.12.10
A
conventional bank licensee must take reasonable steps to ensure that when it publishesinvestment research , disclosure is made of the following matters:
(a) Any financial interest or material interest that theinvestment analyst or a close relative has, which relates to thefinancial instrument ;(b) Any shareholding by theconventional bank licensee or its associate of 1% or more of the total issued share capital of the issuer;(c) Whether theconventional bank licensee or its associate acts as corporate broker for the issuer;(d) Any material shareholding by the issuer in theconventional bank licensee ;(e) Any corporate finance business undertaken by theconventional bank licensee with or for the issuer over the past 12 months, and any future relevant corporate finance business initiatives; and(f) Whether theconventional bank licensee is a market maker in thefinancial instrument .Amended: January 2011
Added: April 2008BC-8.12.11
If a
conventional bank licensee acts as a manager or co-manager of an initial public offering or a secondary offering it must take reasonable steps to ensure that it does not publishinvestment research relating to thefinancial instrument during the period beginning on the day of publication of the listing particulars or a prospectus relating to the offering of thatfinancial instrument and ending on the 30th calendar day after the day on which thefinancial instrument is admitted to trading.Amended: January 2011
Added: April 2008BC-8.12.12
A
conventional bank licensee and its associates must not knowingly execute an own account transaction in afinancial instrument , which is the subject ofinvestment research , prepared either by theconventional bank licensee or its associate, until thecustomers for whom theinvestment research was principally intended have had a reasonable opportunity to act upon it.Amended: January 2011
Added: April 2008BC-8.12.13
The restriction in Rule BC-8.12.11 does not apply if:
(a) Theconventional bank licensee or its associate is a market maker in the relevantfinancial instrument ;(b) Theconventional bank licensee or its associate executes an unsolicited transaction for acustomer ; or(c) It is not expected to materially affect the price of thefinancial instrument .Added: April 2008Inducements
BC-8.12.14
Conventional bank licensees must have systems and controls, policies and procedures to ensure that neither they, nor any of their employees, offer, give, solicit or accept any inducement which is likely to conflict significantly with any duty that they owe to theircustomers .Added: April 2008BC-8.12.15
A
conventional bank licensee may only accept goods and services under asoft dollar agreement if:
(a) The goods and services do not constitute an inducement;(b) The goods and services are reasonably expected to assist in the provision of regulated investment activities to theconventional bank licensee ’scustomers ;(c) The agreement is a written agreement for the supply of goods or services described in Rule BC-8.12.14, and these goods and services do not take the form of, or include, cash or any other direct financial benefit; and(d) Theconventional bank licensee makes adequate disclosures regarding the use ofsoft dollar agreements .Added: April 2008BC-8.12.16
For the purpose of Sub-Paragraph BC-8.12.15(d), Paragraph BC-8.13.12 sets out the minimum disclosure requirements.
Added: April 2008BC-8.12.17
A
soft dollar agreement is an agreement in any form under which aconventional bank licensee receives goods or services in return for investment business put through or in the way of another person.Added: April 2008BC-8.12.18
Before a
conventional bank licensee enters into a transaction for acustomer , either directly or indirectly, with or through the agency of another person, under asoft dollar agreement which theconventional bank licensee has, or knows that another member of its group has, with that other person, it must disclose to itscustomer :(a) The existence of thesoft dollar agreement ; and(b) Theconventional bank licensee ’s or its group’s policy relating tosoft dollar agreements .Added: April 2008BC-8.12.19
If a
conventional bank licensee has asoft dollar agreement under which theconventional bank licensee deals for acustomer , theconventional bank licensee must provide thatcustomer with information as set out in Paragraph BC-8.13.12.Added: April 2008BC-8.13 BC-8.13 Appendix
BC-8.13.1
The minimum information that should be contained in promotional material for specific products includes:
(a) The name of theconventional bank licensee communicating the promotional material;(b) Theconventional bank licensee ’s Category of license;(c) Theconventional bank licensee ’s address;(d) A description of the main characteristics of thefinancial instrument involved or service offered;(e) Suitable warning regarding the risks of thefinancial instrument involved and/or service offered; and(f) A clear statement indicating that, if aretail customer (as defined in Section BC-8.4) is in any doubt about the suitability of the agreement which is the subject of the promotion, he should consult his own financial adviser, or else theconventional bank licensee .Added: April 2008BC-8.13.2
The minimum information that should be contained in the terms of business includes:
(a) The regulatory status of theconventional bank licensee ;(b) A statement that the licensee is bound by the CBB's regulation and licensing conditions;(c) The licensee's name, address, e-mail and telephone number;(d) A statement of the products and services provided by the licensee, as permitted by the CBB;(e) The total price to be paid by thecustomer to theconventional bank licensee for its services, or, where an exact price cannot be indicated, the basis for the calculation of the price enabling thecustomer to verify it;(f) Information on any rights the parties may have to terminate the contract early or unilaterally under its terms, including any penalties imposed by the contract in such cases;(g) Where appropriate, thecustomer's investment objectives;(h) Where appropriate, the extent to which theconventional bank licensee will consider thecustomers' personal circumstances when considering suitability (as required under Section BC-8.7) and the details of such matters that will be taken into account;(i) Any conflict of interest disclosure as required by Section BC-8.12;(j) Any disclosure ofsoft dollar agreements under Section BC-8.12;(k) A statement that clearly indicates the following:(i) Thecustomer's right to obtain copies of records relating to his business with the licensee;(ii) Thecustomer's record will be kept for 5 years or as otherwise required by Bahrain Law; and(l) The name and job title, address and telephone number of the person in theconventional bank licensee to whom any complaint should be addressed (in writing) by thecustomer .Added: April 2008BC-8.13.3
The minimum information that should be contained in a notice in relation to a warrant includes:
"A warrant is a time-limited right to subscribe for shares or debentures and is exercisable against the original issuer of the underlying securities. A relatively small movement in the price of the underlying security results in a disproportionately large movement, unfavourable or favourable, in the price of the warrant. The prices of warrants can therefore be volatile. It is essential for anyone who is considering purchasing warrants to understand that the right to subscribe which a warrant confers is invariably limited in time, with the consequence that if the investor fails to exercise this right within the predetermined time-scale then the investment becomes worthless. You should not buy a warrant unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges."Added: April 2008BC-8.13.4
The minimum information that should be contained in a notice in relation to a futures transaction includes:
"Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases to settle the position with cash. They carry a high degree of risk. The 'gearing' or 'leverage' often obtainable in futures trading means that a small deposit or down payment can lead to large losses as well as gains. It also means that a relatively small movement can lead to a proportionately much larger movement in the value of your investment, and this can work against you as well as for you. Futures transactions have a contingent liability, and you should be aware of the implications of this, in particular the margining requirements."Added: April 2008BC-8.13.5
The minimum information that should be contained in a notice in relation to a purchased option includes:
"Buying options: buying options involves less risk than selling options because, if the price of the underlying asset moves against you, you can simply allow the option to lapse. The maximum loss is limited to the premium, plus any commission or other transaction charges. However, if you buy a call option on a futures contract and you later exercise the option, you will acquire the future. This will expose you to the risks associated with 'futures' and 'contingent liability investment transactions'."Added: April 2008BC-8.13.6
The minimum information that should be contained in a notice in relation to a written option includes:
"Writing options: if you write an option, the risk involved is considerably greater than buying options. You may be liable for margin to maintain your position and a loss may be sustained well in excess of the premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you, however far the market price has moved away from the exercise price. If you already own the underlying asset which you have contracted to sell (when the options will be known as 'covered call options') the risk is reduced. If you do not own the underlying asset ('uncovered call options') the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure."Added: April 2008BC-8.13.7
The minimum information that should be included in a transaction confirmation includes:
(a) Theconventional bank licensee ’s name and address;(b) Whether theconventional bank licensee executed the transaction as principal or agent;(c) Thecustomer ’s name, account number or other identifier;(d) Where relevant, a description of the collective investment undertaking or fund, including the amount invested or number of units involved;(e) Whether the transaction was a sale or purchase;(f) The price or unit price at which the transaction was executed;(g) If applicable, a statement that the transaction was executed on an execution only basis;(h) The date and time of the transaction or a statement that the time of execution will be provided on request;(i) Due date and procedure for settlement of transaction and the bank account;(j) The amount theconventional bank licensee charges in connection with the transaction, including commission charges and the amount of any mark-up or mark-down, fees, taxes or duties;(k) The amount or basis of any charges shared with another person or statement that this will be made available on request;(l) For collective investment undertakings, a statement that the price at which the transaction has been executed is on a historic price or forward price basis, as the case may be;(m) The regulated market on which the transaction was carried out or the fact that the transaction was undertaken outside a regulated market; and(n) Whether theretail customer ’s counterparty was theconventional bank licensee itself or any other person in the conventional bank group.Added: April 2008BC-8.13.8
The minimum information that should be included in a periodic statement includes:
(a) The number, description and value of eachfinancial instrument ;(b) The amount of cash held;(c) The total value of the portfolio; and(d) A statement as to the basis on which the value of eachfinancial instrument was calculated.Added: April 2008BC-8.13.9
The minimum information that should be included in a periodic statement, where the relationship includes portfolio management, includes:
(a) A statement of whichfinancial instruments , if any, were at the closing date loaned to any third party and whichfinancial instruments , if any, were at that date charged to secure borrowings made on behalf of the portfolio;(b) The aggregate of any interest payments made and income received during the account period in respect of loans or borrowings made during that period;(c) A management report on the strategy implemented (provided at least yearly);(d) Total amount of fees and charges incurred during the period and an indication of their nature;(e) Information on any remuneration received from a third party and details of calculation basis;(f) Total amount of dividends, interest and other payments received during the period in relation to thecustomers ’ portfolio;(g) Details of each transaction which have been entered into for the portfolio during the period;(h) The aggregate of money and details of allfinancial instruments transferred into and out of the portfolio during the period;(i) The aggregate of any interest payments, including the dates of their application and dividends or other benefits received by theconventional bank licensee from the portfolio for its own account during that period;(j) A statement of the aggregate charges of theconventional bank licensee and its associates; and(k) A statement of the amount of any remuneration received by theconventional bank licensee or its associates or both from a third party.Added: April 2008BC-8.13.10
The minimum information that should be included in periodic statements, where the relationship includes contingent liability investment transactions, includes:
(a) The aggregate of money transferred into and out of the portfolio during the valuation period;(b) In relation to each open position in the account at the end of the account period, the unrealised profit or loss to thecustomer (before deducting or adding any commission which would be payable on closing out);(c) In relation to each transaction executed during the account period to close out acustomer ’s position, the resulting profit or loss to thecustomer after deducting or adding any commission;(d) The aggregate of each of the following in, or relating to, thecustomer ’s portfolio at the close of business on the valuation date:(i) Cash;(ii) Collateral value;(iii) Management fees; and(iv) Commissions;(e)Option account valuations in respect of each openoption contained in the account on the valuation date stating:(i) Theshare , orfuture or otherfinancial instrument involved;(ii) The trade price and date for the opening transaction, unless the valuation statement follows the statement for the period in which theoption was opened;(iii) The market price of the contract; and(iv) The exercise price of the contract.Added: April 2008BC-8.13.11
The minimum requirements that should be met where the
conventional bank licensee prepares and publishesinvestment research include:
(a) Analysts must not trade in securities or related derivatives ahead of publishing research on the issuer of these securities;(b) Analysts must not trade in securities or related derivatives of any issuer that they review in a manner contrary to their existing recommendations except in special circumstances subject to pre-approval by compliance or legal personnel;(c) Analysts must not accept inducements by issuers or others with a material interest in the subject matter of investment research; and(d) Conventional banks must not promise issuers favorable research coverage, specific ratings or specific target prices in return for a future or continued business relationship, service or investment.Amended: January 2011
Added: April 2008BC-8.13.12
The minimum requirements that should be met where the
conventional bank licensee has asoft dollar agreement under which it deals withcustomers include:
(a) The percentage paid undersoft dollar agreements of the total commission paid by or at the direction of:(i) Theconventional bank licensee ; and(ii) Any other member of theconventional bank licensee ’s group which is a party to those agreements;(b) The value, on a cost price basis, of the goods and services received by theconventional bank licensee undersoft dollar agreements , expressed as a percentage of the total commission paid by or at the direction of:(i) Theconventional bank licensee ; or(ii) Other members of theconventional bank licensee ’s group;(c) A summary of the nature of the goods and services received by theconventional bank licensee under thesoft dollar agreements ; and(d) The total commission paid from the portfolio of thatcustomer .Added: April 2008BC-9 BC-9 Customer Complaints Procedures
BC-9.1 BC-9.1 General Requirements
BC-9.1.1
All
conventional bank licensees must have appropriate customer complaints handling procedures and systems for effective handling of complaints made by customers by 31st March 2012.October 2011BC-9.1.2
Customer complaints procedures must be documented appropriately and their customers must be informed of their availability.
October 2011BC-9.1.3
All
conventional bank licensees must appoint a customer complaints officer and publicise his/ her contact details at all departments and branches and on the bank's website. The customer complaints officer must be of a senior level at the conventional bank and must be independent of the parties to the complaint to minimize any potential conflict of interest.October 2011BC-9.1.3A
The position of customer complaints officer may be combined with that of compliance officer.
Added: July 2012BC-9.1.4
In the case of an overseas
conventional bank licensee , a local complaints officer must be present and must report all complaints to the head office complaints unit.Amended: January 2012
October 2011BC-9.2 BC-9.2 Documenting Customer Complaints Handling Procedures
BC-9.2.1
In order to make customer complaints handling procedures as transparent and accessible as possible, all
conventional bank licensees must document their customer complaints handling procedures. These include setting out in writing:(a) The procedures and policies for:(i) Receiving and acknowledging complaints;(ii) Investigating complaints;(iii) Responding to complaints within appropriate time limits;(iv) Recording information about complaints;(v) Identifying recurring system failure issues.(b) The types of remedies available for resolving complaints; and(c) The organisational reporting structure for the complaints handling function.Amended: January 2012
October 2011BC-9.2.2
Conventional bank licensees must provide a copy of the procedures to all relevant staff, so that they may be able to inform customers. A simple and easy-to-use guide to the procedures must also be made available to all customers, on request, and when they want to make a complaint.October 2011BC-9.2.3
Conventional bank licensees are required to ensure that all financial services related documentation (such as loan documentation) provided to the customer includes a statement informing the customer of the availability of a simple and easy-to-use guide on customer complaints procedures in the event the customer is not satisfied with the services provided.Amended: January 2012
October 2011BC-9.3 BC-9.3 Principles for Effective Handling of Complaints
BC-9.3.1
Adherence to the following principles is required for effective handling of complaints:
October 2011Visibility
BC-9.3.2
"How and where to complain" must be well publicised to customers and other interested parties, in both English and Arabic languages.
October 2011Accessibility
BC-9.3.3
A complaints handling process must be easily accessible to all customers and must be free of charge.
October 2011BC-9.3.4
While a
conventional bank licensee's website is considered an acceptable mean for dealing with customer complaints, it should not be the only means available to customers as not all customers have access to the internet.Amended: January 2012
October 2011BC-9.3.5
Process information must be readily accessible and must include flexibility in the method of making complaints.
October 2011BC-9.3.6
Support for customers in interpreting the complaints procedures must be provided, upon request.
October 2011BC-9.3.7
Information and assistance must be available on details of making and resolving a complaint.
October 2011BC-9.3.8
Supporting information must be easy to understand and use.
October 2011BC-9.3.9
[This Paragraph was deleted in January 2012].
Deleted: January 2012Responsiveness
BC-9.3.10
Receipt of complaints must be acknowledged in accordance with Section BC-9.5 "Response to Complaints".
October 2011BC-9.3.11
Complaints must be addressed promptly in accordance with their urgency.
October 2011BC-9.3.12
Customers must be treated with courtesy.
October 2011BC-9.3.13
Customers must be kept informed of the progress of their complaint, in accordance with Section BC-9.5.
October 2011BC-9.3.14
If a customer is not satisfied with a
conventional bank licensee's response, theconventional bank licensee must advise the customer on how to take the complaint further within the organisation.October 2011BC-9.3.15
In the event that they are unable to resolve a complaint,
conventional bank licensees must outline the options that are open to that customer to pursue the matter further, including, where appropriate, referring the matter to the Consumer Protection Unit at the CBB.Amended: April 2020
Added: October 2011Objectivity and Efficiency
BC-9.3.16
Complaints must be addressed in an equitable, objective, unbiased and efficient manner.
Amended: January 2012
October 2011BC-9.3.17
General principles for objectivity in the complaints handling process include:
(a) Openness:
The process must be clear and well publicised so that both staff and customers can understand.(b) Impartiality:(i) Measures must be taken to protect the person the complaint is made against from bias;(ii) Emphasis must be placed on resolution of the complaint not blame; and(iii) The investigation must be carried out by a person independent of the person complained about.(c) Accessibility:(i) The bank must allow customer access to the process at any reasonable point in time; and(ii) A joint response must be made when the complaint affects different participants.(d) Completeness:
The complaints officer must find relevant facts, talk to both sides, establish common ground and verify explanations wherever possible;(e) Equitability:
Give equal treatment to all parties.(f) Sensitivity:
Each complaint must be treated on its merits and paying due care to individual circumstances.(g) Objectivity for personnel — complaints handling procedures must ensure those complained about are treated fairly which implies:(i) Informing them immediately and completely on complaints about performance;(ii) Giving them an opportunity to explain and providing appropriate support;(iii) Keeping them informed of the progress and result of the complaint investigation;(iv) Full details of the complaint are given to those the complaint is made against prior to interview; and(v) Personnel must be assured they are supported by the process and should be encouraged to learn from the experience and develop a better understanding of the complaints process.(h) Confidentiality:(i) In addition to customer confidentiality, the process must ensure confidentiality for staff who have a complaint made against them and the details must only be known to those directly concerned;(ii) Customer information must be protected and not disclosed, unless the customer consents otherwise; and(iii) Protect the customer and customer's identity as far as is reasonable to avoid deterring complaints due to fear of inconvenience or discrimination.(i) Objectivity monitoring:
Conventional bank licensees must monitor responses to customers to ensure objectivity which could include random monitoring of resolved complaints.(j) Charges:
The process must be free of charge to customers;(k) Customer Focused Approach:(i)Conventional bank licensees must have a customer focused approach;(ii)Conventional bank licensees must be open to feedback; and(iii)Conventional bank licensees must show commitment to resolving problems.(l) Accountability:
Conventional bank licensees must ensure accountability for reporting actions and decisions with respect to complaints handling.(m) Continual improvement:
Continual improvement of the complaints handling process and the quality of products and services must be a permanent objective of theconventional bank licensee .Amended: January 2012
October 2011BC-9.4 BC-9.4 Internal Complaint Handling Procedures
BC-9.4.1
A
conventional bank licensee's internal complaint handling procedures must provide for:(a) The receipt of written complaints;(b) The appropriate investigation of complaints;(c) An appropriate decision-making process in relation to the response to a customer complaint;(d) Notification of the decision to the customer;(e) The recording of complaints; and(f) How to deal with complaints when a business continuity plan (BCP) is operative.October 2011BC-9.4.2
A
conventional bank licensee's internal complaint handling procedures must be designed to ensure that:(a) All complaints are handled fairly, effectively and promptly;(b) Recurring systems failures are identified, investigated and remedied;(c) The number of unresolved complaints referred to the CBB is minimised;(d) The employee responsible for the resolution of complaints has the necessary authority to resolve complaints or has ready access to an employee who has the necessary authority; and(e) Relevant employees are aware of theconventional bank licensee's internal complaint handling procedures and comply with them and receive training periodically to be kept abreast of changes in procedures.October 2011BC-9.5 BC-9.5 Response to Complaints
BC-9.5.1
A
conventional bank licensee must acknowledge in writing customer written complaints within 5 working days of receipt.October 2011BC-9.5.2
A
conventional bank licensee must respond in writing to a customer complaint within 4 weeks of receiving the complaint, explaining their position and how they propose to deal with the complaint.October 2011Redress
BC-9.5.3
A
conventional bank licensee should decide and communicate how it proposes (if at all) to provide the customer with redress. Where appropriate, theconventional bank licensee must explain the options open to the customer and the procedures necessary to obtain the redress.October 2011BC-9.5.4
Where a
conventional bank licensee decides that redress in the form of compensation is appropriate, theconventional bank licensee must provide the complainant with fair compensation and must comply with any offer of compensation made by it which the complainant accepts.October 2011BC-9.5.5
Where a
conventional bank licensee decides that redress in a form other than compensation is appropriate, it must provide the redress as soon as practicable.October 2011BC-9.5.6
Should the customer that filed a complaint not be satisfied with the response received as per Paragraph BC-9.5.2, he can forward the complaint to the Consumer Protection Unit at the CBB within 30 calendar days from the date of receiving the letter.
Amended: April 2020
Added: October 2011BC-9.6 BC-9.6 Records of Complaints
BC-9.6.1
A
conventional bank licensee must maintain a record of all customers' complaints. The record of each complaint must include:(a) The identity of the complainant;(b) The substance of the complaint;(c) The status of the complaint, including whether resolved or not, and whether redress was provided; and(d) All correspondence in relation to the complaint. Such records must be retained by theconventional bank licensees for a period of 5 years from the date of receipt of the complaint.October 2011BC-9.7 BC-9.7 Reporting of Complaints
BC-9.7.1
A
conventional bank licensee must submit to the CBB's Consumer Protection Unit, 20 days after the end of the quarter, a quarterly report summarising the following:(a) The number of complaints received;(b) The substance of the complaints;(c) The number of days it took theconventional bank licensee to acknowledge and to respond to the complaints; and(d) The status of the complaint, including whether resolved or not, and whether redress was provided.Amended: April 2020
Added: October 2011BC-9.7.2
The report referred to in Paragraph BC-9.7.1 must be sent electronically to complaint@cbb.gov.bh.
Amended: April 2020
Added: July 2013BC-9.7.3
Where no complaints have been received by the licensee within the quarter, a 'nil' report should be submitted to the CBB's Consumer Protection Unit.
Amended: April 2020
Added: July 2013BC-9.8 BC-9.8 Monitoring and Enforcement
BC-9.8.1
Compliance with these requirements is subject to the ongoing supervision of the CBB as well as being part of any CBB inspection of a licensee. Failure to comply with these requirements is subject to enforcement measures as outlined in Module EN (Enforcement).
October 2011BC-10 BC-10 Measures and Procedures for Services Provided to Disabled Customers by Bahraini Retail Banks
BC-10.1 BC-10.1 General Requirements
This Chapter BC-10 is applicable only to Bahraini retail banks that operate 10 or more branches.
Amended: April 2017BC-10.1.1
Bahraini retail banks must develop special measures and procedures when providing financial and banking services and transactions for
disabled customers to safeguard their rights in requesting and receiving information to ensure equal treatment amongst all customers.Disabled customers must be identified based on the certificate issued by the Ministry of Labour and Social Development or a medical certificate issued by a qualified doctor.Amended: April 2017
Added: April 2016BC-10.1.2
Bahraini retail banks are encouraged to enhance the
disabled customers' access to their ranges of banking services by:(a) Liaising with organisations representingdisabled customers to provide assistance; and(b) Keeping pace with changing technologies involving ATMs, electronic and internet banking.Amended: April 2017
Added: April 2016BC-10.1.3
Bahraini retail banks must have in place appropriate methods to communicate with the disabled to address their specific needs.
Amended: April 2017
Added: April 2016BC-10.1.4
Bahraini retail banks must ensure that all legal requirements/documentations are taken into consideration when entering into contracts with
disabled customers with the aim of protecting thedisabled customers and themselves in court cases.Amended: April 2017
Added: April 2016BC-10.1.5
Bahraini retail banks must ensure that
disabled customers are provided full access to all banking and financial services offered by the bank, including the provision of ATM cards on the same basis as for all other bank customers.Amended: April 2017
Added: April 2016BC-10.1.6
Bahraini retail banks must provide fast track and/or priority services for
disabled customers to address their banking needs.Amended: April 2017
Added: April 2016Fees and Charges
BC-10.1.7
Fees and charges on withdrawals, done through bank counters must be waived for all
disabled customers .Added: April 2016BC-10.1.8
Monthly fees and charges on current and savings account, including minimum balance charges, must be waived for all
disabled customers .Added: April 2016Branch and ATM Requirements
BC-10.1.9
Bahraini retail banks must provide at least one branch for serving the
disabled customers in line with the requirements in this Module, in addition to the normal branch activities. At least one ATM machine must be provided in the branch to serve thedisabled customers .Amended: April 2017
Added: April 2016BC-10.1.10
To ensure an adequate geographical distribution within the Kingdom of Bahrain, the CBB will expect two specially equipped branches within each governorate of the Kingdom. The geographical distribution will be coordinated by the CBB.
Added: April 2016BC-10.1.11
With reference to Paragraph BC-10.1.9, the ATM devices must be equipped with technology specially adapted for customers with disabilities where ATMs must:
(a) Be wheelchair accessible, ensuring that the ATM is set at an appropriate height and track for movement; and(b) Provide Braille alphabet and voice software technology (talking ATM) for the visually impaired customers.Added: April 2016Customer Account Numbers
BC-10.1.12
Customer account numbers provided for accounts of
disabled customers must be identifiable among other customer accounts to ensure that thedisabled customers are offered the specialised services as outlined in this Chapter and that all bank staff offers the bank's services accordingly, whether in person or by phone.Added: April 2016In Branch Services
BC-10.1.13
Bahraini retail banks must provide a special priority desk for
disabled customers , clearly designated with a special logo. In addition parking facilities and easy access entrances must also be provided.Amended: April 2017
Added: April 2016BC-10.1.14
Within the branch itself, special layout and signage must be used to facilitate the movement of
disabled customers , including the use of any elevators, should this be the case.Added: April 2016Training for Bank Staff
BC-10.1.15
Bahraini retail banks must ensure that their staff dealing with
disabled customers are enrolled in specialised training to ensure that they are qualified and fully familiar with the use of any specialised technology adapted for such customers and to address any other special requirements in dealing with these customers. Such training must be part of the staff's overall training requirements.Amended: April 2017
Added: April 2016Personal Banking
BC-10.1.16
Bahraini retail banks must provide special door step non-cash financial services to
disabled customers .Amended: April 2017
Added: April 2016BC-10.2 BC-10.2 Special Services for Visually Impaired Customers
BC-10.2.1
Bahraini retail banks must provide the following application forms along with the terms and conditions of contracts signed by visually impaired customers for all conducted transactions in Braille format or voice records or screen readers or any other advanced and secured means:
(a) Account opening forms;(b) Facilities contracts;(c) Investment and transactions documents;(d) Instructions manuals; and(e) Customer notifications.Amended: April 2017
Added: April 2016BC-10.2.2
Bahraini retail banks may accept electronic signatures and electronic finger print as a satisfactory form of signature to meet the needs of the
disabled customers . Banks should refer to Legislative Decree No. (54) of 2018 with respect to Electronic Transactions "The Electronic Communications and Transactions Law" and its amendments. Banks may determine the terms and conditions on which the facilities of biometric identification can be extended to thedisabled customers .Amended: January 2020
Amended: April 2017
Added: April 2016BC-10.2.3
Bahraini retail banks must ensure that two bank employees witness when transactions undertaken by visually impaired customers. In case of customers with visual as well as hearing impairments, Bahraini retail banks must ensure that witnesses (other than bank staff) are present for the signature of any transaction and that documents providing the identity of such witnesses are submitted.
Amended: April 2017
Added: April 2016BC-10.2.4
Bahraini retail banks must provide speaking screens for the priority waiting area of banks for visually impaired customers.
Amended: April 2017
Added: April 2016BC-10.3 BC-10.3 Special Services for Hearing Impaired Customers
BC-10.3.1
Bahraini retail banks must ensure that their staff dealing with hearing impaired customers are enrolled in specialised training on sign language or provide a full time translator/interpreter in the bank's premises, dedicated to communicate with such customers.
Amended: April 2017
Added: April 2016BC-10.3.2
To facilitate the implementation of Paragraph BC-10.3.1, retail banks should provide a banking dictionary designed to address banking vocabulary by way of sign language through video clips and pictures to enable such customers to have a clear understanding of the banking terminology being used.
Amended: April 2017
Added: April 2016BC-11 BC-11 Financial Advice Programme
BC-11.1.1
All banks must ensure that staff members who provide financial advice to customers are enrolled in the BIBF Financial Advice Programme (“FAP”). Staff members with less than three years of experience must be enrolled for the foundation level course while staff members with three to five years of experience must be enrolled in the Level 2 programme. Staff members with five years of experience must be enrolled for the Level 3 FAP programme. However, FAP is not mandatory for employees who occupy controlled functions or employees who have the Chartered Financial Analyst (CFA) or the Certified Financial Planner (CFP) qualifications.
Amended: July 2022
Added: October 2018BC-11.1.2
All banks must ensure that a suitably experienced designated senior manager monitors compliance with the requirement in BC-11.1.1 on an on-going basis.
Added: October 2018
BC-11.1.3
[This Paragraph was deleted in January 2022].
Deleted: January 2022
Added: October 2018