New Banking Products and Services Regulation

SAMA will acknowledge receipt of the notification within (10) business days of receiving the bank’s request. In case, a bank does not receive acknowledgement receipt from SAMA within (10) business days from sending the notifications, it is the bank’s responsibility to follow up with Banking Licensing Division via ( [email protected] ) for confirming that whether SAMA has received the notification or not. 7.1.3 Banks will be able to launch new products and services once they receive SAMA’s acknowledgement of receipt of the bank’s notification. 7.1.4 Banks must launch their new products and services within (12) months of receiving the acknowledgment receipt from SAMA, otherwise the bank must submit a new notification. 7.1.5 SAMA have the right to ask banks for further information about products and services despite the fact that bank has launched the products and services or not. 7.1.6 SAMA may prohibit a bank from introducing or continuing to offer any products or services if SAMA concludes that such product or service will undermine SAMA’s primary objective of maintaining safety and soundness of the financial sector. 7.1.7 Banks must not reintroduce a product or service that has been stopped or discontinued by the bank for more than (12) months without notifying SAMA by following the notification requirements as per clause (7.1.1). 7.2 Non-objection Requirements for Specified Products and Services 7.2.1 Banks are required to seek SAMA’s non-objection for the below products and services prior launching, as an exception to the notification requirements: 1. Home Loans Products. 2. Financial Lease Products. 3. Financial Derivatives. 4. Products and services that are not covered in existing rules and regulations issued by SAMA. 7.2.2 Banks that do not comply with required maturity level stated in clause (7.1) , must apply for nonobjection for all types of products and services. 7.2.3 Banks must launch their new products and services within (12) months of receiving the SAMA’s non-objection, otherwise the bank must submit a new application. 7.2.4 Banks must not reoffer a product or service that has been stopped or discontinued for more than (12) months without a new non-objection from SAMA, as per clauses (7.2.1) and (7.2.2) for products or services that require SAMA’s non-objection. 7.3 Offering of Financial Derivatives Products Banks must ensure the following are satisfied before submitting a non-objection application to SAMA: 7.3.1 Banks seeking to introduce new financial derivatives products for their customers are required to develop and implement internal customer suitability procedures ensuring that these products are only sold to suitable customers. 7.3.2 Customer suitability procedures must be designed to seek sufficient knowledge about the customer to establish that the customer has a practical understanding of the features of the product and the risks to be assumed. 7.3.3 For complex financial derivatives such as structured products, the complexity of the payoff structure can make it difficult for customers to accurately assess the value and risk of the structured product. Banks must clearly demonstrate to the customer the potential profit and loss scenarios for the structured products over the time horizon. 7.3.4 Banks must ensure that customers are fully aware of risks involved in complex products such as financial derivatives and structured products, the product must meet the customer’s business or investment objectives and risk appetite, the customer have prior investment experience and fully understood and sign-off the terms of contract accordingly. 7.3.5 Banks must not recommend a financial derivative product to a customer unless it is reasonably satisfied that the product is suitable for that particular customer and the nature of the customer’s business. Such a decision must be made based on information sought and obtained from the customer.