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CBUAE Consumer Protection in Lending for Frontline Bank Staff

Course Description:

This one-day course provides focused training on the CBUAE Consumer Protection Regulation (Circular No. 8 – 2020) and the accompanying Consumer Protection Standards as they specifically relate to the sale of lending products across Retail, SME, and Corporate banking segments. The training will emphasise key principles and requirements concerning disclosure, transparency, responsible financing practices, and fair treatment of consumers throughout the lending lifecycle, from initial engagement to ongoing management. Participants will gain a clear understanding of their responsibilities in ensuring compliance with the Central Bank’s regulations and standards when offering and providing credit facilities.

Course Objectives:

The objective of this training is to introduce participants to the following main topics:

  • The key principles of the CBUAE Consumer Protection Framework and its relevance to the provision of lending products.
  • The specific requirements for Disclosure and Transparency at all stages of the lending process, including pre-contractual information, Key Facts Statements, and loan agreements.
  • The principles of Responsible Financing Practice as outlined in the regulations and standards, including assessing affordability and suitability.
  • Guidelines for ensuring Fair Treatment of Consumers in the context of lending, including ethical conduct and avoiding undue pressure.
  • The importance of obtaining expressed and documented consent from consumers before granting or extending any form of credit.
  • Requirements related to providing a complete repayment/payment schedule to consumers.
  • Specific considerations for disclosure regarding security, guarantees, and collateral required for credit products.
  • Regulations concerning early settlement fees and the need for clear explanation.
  • Provisions related to Debt Collection Practices, ensuring fair and ethical approaches.
  • The staff’s role in Consumer Education and Awareness regarding lending products and associated risks.
  • Awareness of Complaint Management and Complaint Resolution procedures relevant to lending.
  • The application of consumer protection principles when dealing with Retail/Consumer, SME, and Corporate customers in the context of lending, noting any segment-specific considerations.

Course Outline:

  • Foundations of CBUAE Consumer Protection in Lending (Morning Session)
    • Overview of the CBUAE’s objectives for consumer protection in the financial sector.
    • Scope of the Consumer Protection Regulation and Standards, specifically relating to lending products.
    • The principle-based approach of the Regulation and the role of the Standards.
    • Importance of interpreting the Regulation and Standards in conjunction with other regulations, including Shari’ah compliance where applicable.
    • The responsibilities of frontline staff in upholding consumer protection when selling lending products.
  • Disclosure and Transparency in Lending (Morning Session)
    • General disclosure requirements for all financial products and services, with a focus on lending.
    • Providing clear, accurate, and comprehensive information at all stages of the lending relationship.
    • Understanding and utilising Key Facts Statements for credit products, including disclosure of interest/profit rates, fees, key terms, and warnings about risks.
    • Disclosure of security, guarantor, co-signer, or collateral requirements.
    • Providing a copy of the terms and conditions and the contract to the consumer with adequate time for review before signing.
    • The importance of avoiding partial or biased disclosure.
    • Transparency regarding changes in terms and conditions.
  • Responsible Financing Practices (Afternoon Session)
    • The principle of providing financing in a responsible manner to prevent over-indebtedness.
    • Requirements for obtaining credible and independent information regarding the consumer’s financial situation.
    • Assessing the consumer’s relevant financial obligations and their ability to meet repayment terms – affordability assessment.
    • Ensuring expressed and documented consent before granting credit.
    • Avoiding reward programs that incentivise excessive credit granting.
    • Providing consumers with a written offer containing key loan details and the total repayment amount.
    • Supplying a complete repayment/payment schedule document.
    • Restrictions on taking signed blank cheques.
  • Fair Treatment and Consumer Rights in Lending (Afternoon Session)
    • Treating all consumers fairly, equally, and honestly throughout the lending relationship.
    • Providing clear and understandable information about consumer rights and responsibilities.
    • Prohibiting undue and coercive pressure on consumers in the collection of repayments.
    • Handling consumers facing financial difficulties with respect and empathy.
    • Procedures for revised payment arrangements and clear communication to the consumer.
    • Ethical considerations in debt collection practices.
  • Specific Considerations for Different Customer Segments (Afternoon Session)
    • Applying consumer protection principles to Retail/Consumer banking customers in lending.
    • Key considerations when offering lending products to SME customers, including disclosure and assessment processes.
    • Consumer protection in the context of Corporate lending, highlighting any distinctions or specific requirements.

Course Outcomes:

Upon completion of this course, participants will be able to:

  • Understand the core principles of the CBUAE Consumer Protection Regulation and Standards relevant to selling lending products.
  • Apply the requirements for Disclosure and Transparency at each stage of the lending process with all customer segments.
  • Implement Responsible Financing Practices by appropriately assessing customer financial situations and ensuring informed consent.
  • Ensure Fair Treatment of Consumers in all lending-related interactions, including debt collection.
  • Provide accurate and comprehensive information regarding lending products, including terms, conditions, risks, and fees.
  • Effectively utilise Key Facts Statements to communicate essential information to customers.
  • Recognise and address potential issues related to early settlement and revised payment arrangements.
  • Handle initial customer inquiries and complaints related to lending in accordance with internal procedures.
  • Contribute to Consumer Education by clearly explaining lending products and their implications.
  • Comply with the CBUAE’s requirements for consumer protection when selling lending products to Retail, SME, and Corporate customers.

Training Methodology:

  • Interactive lectures and presentations incorporating real-world scenarios specific to selling lending products.
  • Case studies and group discussions analysing practical application of the regulations and standards in various lending situations.
  • Role-playing exercises simulating customer interactions during the lending process, including disclosure and addressing concerns.
  • Quizzes and polls to reinforce understanding of key regulatory requirements.
  • Emphasis on practical examples and best practices in disclosure, customer assessment, and ethical sales conduct in lending.

Target Audience:

Frontline staff of commercial banks engaged in selling lending products to Retail/Consumer banking customers, as well as SME and Corporate customers.

Assessment Methods:

  • Short quizzes or polls during the training sessions to gauge immediate comprehension.
  • Observation of active participation in group discussions and role-playing activities.
  • A brief multiple-choice or short-answer knowledge check at the end of the session focusing on key regulatory requirements for lending.
  • Feedback forms to evaluate the effectiveness of the training content and delivery.

 

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