A. About this Code

• This Code has been prepared jointly by the Bahrain Association of Banks (“BAB”) and the Central Bank of Bahrain (“Central Bank” or “CBB”). It sets out minimum standards for retail banks and financing companies (“Central Bank licensees” or “Licensees”) 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.
• The Code was later amended by the Central Bank to align with changes introduced into its Rulebook. This Code applies where any Central Bank licensee provides to a consumer:
  • Any financial product creating a creditor–debtor relationship (including Shari’a compliant credit facilities of all types).
  • Any financial service for which a Central Bank licensee charges a fee.
• 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.

B. Principal Commitments

The overriding duty of all Central Bank licensees is to act fairly, responsibly, and reasonably in their dealings with consumers. The principal commitments are:

Licensees should ensure that all advertising and promotional material relating to consumer financing and credit is clear and not misleading.

Licensees should provide clear information and documentation about products and services, including application procedures, terms and conditions, profit rates, and applicable charges.

Licensees should provide customers with regular statements at least every six months and notify them in writing of any changes to profit rates, charges, or terms. Customers must inform the bank of any change in contact details.

Licensees should deal sympathetically with genuine financial difficulties and treat customer information as private and confidential.

C. Helping the Customer Choose a Product Which Meets Their Needs

For each new (or potentially new) customer, licensees should:

• Provide transparent and factual information on key features and benefits.
• Advise customers on available delivery channels and how to obtain further information.
• Inform customers of applicable details and eligibility criteria once a product is selected.

D. Profit Rates

1. Licensees must inform consumers where profit rate information can be obtained, including:
   • Branch notices
   • Websites
   • Staff assistance
2. Consumers must receive written information on initial profit rates and any changes. Shari’a compliant institutions must disclose equivalent charging mechanisms.
3. Licensees must provide a full explanation of how profit margins are calculated.
4. Annual Percentage Rates (APR) must be publicized in branches, websites, and schedules of charges.
5. Customers must be informed of profit rate changes before they take effect.
6. Updated rates must be reflected on websites within two working days, alongside the previous rate for comparison.

E. Financing

1. Licensees must assess a customer’s ability to repay before granting credit.
2. Facilities repayable on demand must be clearly disclosed.
3. Licensees must comply with Central Bank consumer finance rules.

F. Charges

1. Customers must be informed of applicable charges, including:
   1. Administration or arrangement fees
   2. Prepayment charges
   3. Default profit rates
   4. Insurance
2. Customers must be informed where to obtain charge information:
   1. Helplines
   2. Websites
   3. Staff
3. Any increase or new charge must be communicated in advance, with customers given 15 days to terminate if not accepted.
4. Charges must be disclosed before service provision and upon request.
5. All charges must be justifiable.
6. Charges should be published on licensee websites.

G. Financial Difficulties

1. Licensees should attempt to resolve financial difficulties before legal action.
2. Alternative repayment arrangements should be considered where possible.
3. Basic debt counseling should be provided.

H. Complaints

1. Formal complaints procedures must be in place and submitted to the Central Bank.
2. A customer complaints officer must be appointed and publicized.
3. Written complaints must be acknowledged within 5 working days.
4. A written response must be provided within 4 weeks.
5. Escalation procedures must be explained if the customer is dissatisfied.
6. Unresolved complaints must include referral options to the Central Bank.

I. Monitoring

1. The complaints or compliance officer must monitor adherence to this Code.
2. The Central Bank may request compliance reports.
3. Staff must be trained and familiar with the Code.
4. Copies of the Code must be available in branches and on websites.
5. The Central Bank will also publish the Code on its website.

J. Disclaimer

This Code does not have legal implications and remains subject to the rules of the CBB Rulebook.

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