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  • Disclosure of key terms

    • CM-7.5.1

      Licensees must make clear to potential counterparties, prior to entering into a consumer finance agreement, all relevant key terms of the agreement.

    • CM-7.5.2

      These terms should be summarised in plain English and Arabic in a short "key terms disclosure" document; this document must be signed and dated by counterparties (in duplicate) as having been read and understood, prior to signing a consumer finance agreement. One copy should be retained by the counterparty and the other must be retained by the licensee in their customer file.

    • CM-7.5.3

      The "key terms disclosure" document must, amongst other things, make clear:

      (a) the amount being received or the credit limit being offered, its maturity and repayment schedules;
      (b) the nominal amount of the cost of credit to be provided to the customer;
      (c) whether this cost of credit is fixed or can go up and / or down, and under what circumstances;
      (d) the basis on which the cost of credit is calculated and when capital repayments are taken into account in the calculation, together with an illustration of the calculation method;
      (e) a breakdown of all other costs not included in (b), (c) and (d) above and associated with the credit, such as arrangement fees, documentation fees, late payment fees (if permitted by the Shari'a Board), and obligatory payment protection insurance costs;
      (f) the full costs associated with top-ups of installment facilities or early repayments of amounts due (in full or in part if permitted by the Shari'a Board), including the treatment of remaining profit and the payment of premium for insurance; and
      (g) the Profit Rate, as defined in paragraph CM-7.5.5 below.

    • CM-7.5.4

      Licensees are free to design the layout and wording to be used in their "key terms disclosure" document, as they see fit, providing they contain the information specified in paragraph CM-7.5.3 above. BMA will monitor compliance with the spirit as well as the letter of the requirements in this chapter. If necessary, BMA will consider prescribing a standard template to be used by all licensees engaged in consumer finance.