New Banking Products and Services Regulation

New Product or Service A new product or service is one that a bank offers for the first time in Saudi Arabia notwithstanding the fact that a bank, its parent bank, branches or subsidiaries in a foreign jurisdiction may have offered similar product and service outside of Saudi Arabia, or a variation to an existing product offered by bank in Saudi Arabia or a combination of product or service with another existing or new product or service, that results in a material change (1) to the structure, features or risk profile of the existing product or service. (1) Material changes or modifications may include, for example, significant changes to key terms related to payout, rights and obligations of the counterparties/customers, the changes in nature of assets underlying the product or service, changes result in new or additional risk exposure to the bank or the customer. 4.3 Existing Product or Service An existing product or service, which a bank had offered, and continue to offer, until the bank decides to discontinue or make material modifications to the product or service. 5. Board of Directors and Senior Management Responsibilities 5.1 Board of Directors (The Board) 5.1.1 The Board has an oversight responsibility (2) to ensure that senior management develop and implement the detailed internal policies and procedures for offering of new products and services. 5.1.2 The Board is responsible for ensuring that product and service risks are well managed, and the needs and rights of consumers are appropriately addressed. 5.1.3 The Board must review whether the offering of products and services by the bank remains consistent with the risk appetite approved by the board and internal policies and procedures for offering of new products and services. 5.1.4 The Board must review and revise the bank’s risk appetite when the offering of products and services by the bank is no longer consistent with the approved risk appetite. Any changes to the risk appetite must be justified and documented with detailed risk assessment, taking into consideration the risk management capabilities and risk bearing capacity of the bank. The Board must also ensure that internal policies and procedures are updated by senior management accordingly following changes in risk appetite. (2) The management function responsible for overseeing the operations of Foreign Bank Branch (FBB) are to ensure that policies an d procedures for new products and services are consistent with the requirement of this regulation, and effectively implemented in its operations. 5.2 Senior Management 5.2.1 Senior management are responsible for the design, implementation, and compliance of the bank’s new products and services with the Board approved internal policies and procedures for offering of new products and services. 5.2.2 Senior management must ensure that offering of any new or existing products and services must fall within the scope of banking business as defined in the Banking Control Law . 5.2.3 Senior management must ensure that that risks arising from new products and services are well understood and aligned to the bank’s risk appetite and tolerance level. 5.2.4 Senior management has to determine whether the change to any product or service is considered to be a material change (3) . 5.2.5 Senior management must periodically review the appropriateness of the products and services internal policies and procedures and whether they continue to meet the objectives as set out in this regulation, and must propose to the Board that the policies and procedures be amended if this is no longer the case. 5.2.6 Senior management must identify and mitigate potential negative effects on the bank's reputation either actual or perceived.