Everything You Need to Know About Egypt's New Consumer Finance Guide

The Financial Regulatory Authority (FRA) has issued the first guide to bring together the rules governing consumer finance activity in Egypt. Decisions, instructions and circulars that had previously existed as separate documents are now collected into a single reference, built on Consumer Finance Activity Regulation Law No. 18 of 2020 along with subsequent decisions from the FRA's board of directors and chairman.

The guide follows the stages of a consumer finance company's operations in sequence. It opens with establishment and licensing procedures, capital requirements and shareholder structure, then moves into governance: the composition of boards of directors, the committees that stem from them, and the internal control systems companies are expected to maintain. Financial solvency standards, financing contract templates and procedures for registering branches are also addressed.

Customer-facing rules make up a significant part of the document. Companies are required to disclose financing information clearly and accurately, covering repayment schedules, costs, expenses, benefits and risks. Customer guarantees are regulated as well, and companies are barred from taking blank signed documents or trust receipts as security for financing. Anti-money laundering and counter-terrorist financing procedures are set out alongside customer due diligence, suspicious transaction reporting and record-keeping requirements, and companies must report customer information to credit information companies as part of the broader push toward integrated credit data.

Creditworthiness assessment is treated as an ongoing obligation rather than a one-time check. Companies are required to evaluate customers' ability to repay before financing is extended, monitor existing financing, and follow up with customers who fall behind on repayment. The guide also calls for digital creditworthiness assessment systems that weigh factors including repayment capacity and a customer's overall financial position, and companies are expected to confirm that financing is being used for its stated purpose.

On solvency, the guide incorporates Basel III standards, covering capital adequacy, leverage and liquidity ratios, along with provisioning, concentration risk and stress testing. Technology and cybersecurity requirements sit alongside these financial standards: companies must maintain the infrastructure and systems needed for their operations, establish IT governance and risk management frameworks, and conduct periodic penetration tests, with compliance treated as one of the conditions for keeping a license active.

The framework extends past the consumer finance companies themselves. A register is being established for debt collection companies operating across non-banking finance activities, under which customers must be notified of the details of the collectors contracted to work with them, including how their identities can be verified and what official channels of communication are used. Complaints against collection companies are to be followed up, with corrective measures taken where needed. Separately, consumer finance companies are now required to provide insurance for financed customers up to age 65, covering death and permanent total disability, with the insured amount set to match the customer's outstanding financing balance.