Referring to Article 83 of the Implementing Regulations of the Finance Companies Control Law. "The statement that 'the fees, commissions, and administrative service costs that the financing company receives from the beneficiary shall not exceed (1%) of the loan amount or (5000) five thousand riyals, whichever is less,' and to..." Article Nine of the Regulations for Consumer Financing. The provision states that "Administrative fees and service charges levied by the financing entity on the beneficiary should not exceed (1%) of the financing amount or 5000 Riyals, whichever is lesser."

SAMA would like to clarify that the fees and administrative service costs referred to in the above articles include all amounts that the beneficiary is required to pay aside from the financing amount and profit margin. This includes all unavoidable fees, costs, and commissions necessary to obtain financing, such as, but not limited to, fees for processing the financing request, property appraisal fees, property inspection fees, registration fees, etc. SAMA also emphasizes that the responsibility for liaising with relevant entities to finalize the financing procedures (such as property appraisers and registration authorities) and paying the due costs to them lies solely with the bank. It is not permissible to delegate the beneficiary (client) to pay any amounts related to third parties. Furthermore, it is necessary to ensure that all fees and expenses the beneficiary needs to pay to obtain the financing are included in the annual percentage rate.

For your information and action, effective from the date of this circular.