A. About this Code
1. This Code has been prepared jointly by the Banker’s Society of Bahrain (“BSB”) and the Central Bank of Bahrain (“Central Bank” or “CBB”). It sets out minimum standards for retail banks and financing companies (thereafter referred to as Central Bank licensees or Licensees) to follow when providing credit and other services on which fees and/or interest (profit margin in case of Shari’a compliant financing) are payable by personal customers in the Kingdom of Bahrain.
2. This Code applies where any Central Bank licensee provides to a consumer:
3. Adherence to this Code is mandatory for all Central Bank licensees. Consumers are encouraged to inform the Central Bank where they believe there has been non-compliance with the Code.
B. Principal Commitments
The overriding duty of all Central Bank licensees is to act fairly, responsibly and reasonably in their dealings with consumers.
The four overriding principal commitments are:
C. Helping the Customer Choose a Product which Meets their Needs
For each new (or potentially new) customer, licensees should:
D. Interest /Profit Rates
1. Licensees must inform consumers when they are contemplating buying a product or at any time they ask how and where they can find information about interest/profit rates. For example:
- by looking at the notices in the branch (or branches);
- by looking on the website, and/or
- by asking staff
2. Licensees must provide consumers with written information about the initial interest rates that apply to their loan when such interest is payable, as well as the notification of changes. Shari’a compliant institutions must provide consumers with written information on equivalent forms of charging (such as “profit rates” etc.), and references to obligations concerning “interest/profit rates” in this Code shall be construed accordingly.
3. A licensee must give a full explanation of how the interest (profit margin in case of Shari’a compliant financing) is calculated.
4. Licensees must publicise in branches, on websites and in their schedule of charges the annual percentage rate (APR) and bring this to the attention of new customers.
5. Licensees must inform customers of any changes to interest/profit rates in an effective manner before they take effect.
6. When interest/profit rates change, licensees must update this information on their websites within two working days. Licensees must also advise the old rate so that customers can compare how the new rate has changed.
E. Interest /Profit Rates
1. Before a licensee makes a loan or provides any other form of credit, it must assess whether the customer will be able to repay, given its knowledge of the customer’s current circumstances.
2. If an overdraft (or any other type of facility) is repayable “on demand”, licensees should make this clear to the customer.
3. Licensees should comply with Central Bank rules on consumer finance.
1. Customers must be given details of any charges that apply (or may apply) to the product or service they are intending to purchase, including:
2. Customers must also be given information on where to find out about charges, for example:
- phoning the helpline;
- looking at the website, and/or
- asking staff
3. If a licensee increases any charges or introduces a new charge, it must inform the customer before the charge take effect. If the customer does not accept the increase or new charge, the licensee should give the customer the option of terminating the relationship within 15 days of application of the charge. If the consumer does not terminate the relationship within this time, it will be deemed as accepted.
4. Licensees should advise customers of any charges both before a product or service is provided and at any time the customer asks.
5. Licensees should ensure that all charges are justifiable for the service and products provided to customers.
6. Licensees that have web sites should publicise their charges on their site.
G. Financial Difficulties
1. Licensees should always endeavour to discuss financial difficulties with their customers before taking legal proceedings.
2. Where possible, licensees should consider alternative arrangements to enable customers to overcome their repayment difficulties.
3. Licensees should provide customers with a minimal level of counselling on debt problems.
1. Licensees must have in place a formal customer complaints procedures and a copy of this should be submitted to the Central Bank. Moreover, licensees should appoint a customer complaints officer and publicise his/her contact details at all branches.
2. Licensees must inform customers of the complaints procedures and should provide a written leaflet outlining the procedures.
3. Licensees should acknowledge in writing customer complaints received in writing within 5 working days of receipt.
4. Within 4 weeks of written acknowledgement to the customer, licensees should respond in writing explaining their position and how they propose to deal with the complaint.
5. If a customer is not satisfied with a licensee’s response, the licensee should advise the customer on how to take the complaint further within the organisation.
6. In the event that they are unable to resolve a complaint, licensees must outline the options that are open to that customer to pursue the matter further, including, where appropriate, referring the matter to the Compliance Directorate at the Central Bank.
1. The customer complaints officer (who may be the same person as the Compliance Officer) should also monitor the licensee’s adherence to this Code.
2. The Central Bank may, from time to time, ask the Compliance Officer to report on the licensee’s record of adherence to the Code.
3. Licensees should implement this Code and ensure that their staff are fully familiar with it.
4. Copies of the Code should be made available to customers and notices should be displayed in all branches and on websites explaining that copies of the Code are available.
5. The Central Bank will also display a copy of this Code on its own website.
For the avoidance of doubt, this Code shall not have any legal implications, and the provisions therein shall be subject to the rules of the CBB Rulebook.