الهيئة العامة للرقابة المالية

• Suspension does not affect companies or entities that have already established or obtained preliminary approval for consumer finance or micro- finance activities.
• The decision follows a significant increase in the number of licenses issued recently.
• FRA aims to assess the financial solvency of existing companies in the sector.
• An upcoming community dialogue will focus on Basel III solvency standards for non-bank finance companies.
• FRA has granted 10 new licenses to companies and 16 new applications to microfinance associations and companies within the past two years. In total, there are 25 licensed companies.
• FRA has issued 15 new consumer finance licenses, with approximately 4 applications currently under consideration. There are a total of 30 licensed consumer finance companies.

In order to maintain financial stability and ensure the effective functioning of non-bank financial institutions, FRA issued decree no. 184 of 2024 to – temporarily – suspend the acceptance of new applications for establishing and licensing consumer finance and micro-finance activities through traditional methods for one year.  This decree comes in response to the significant growth in the number of new licenses issued to companies operating in these sectors.

FRA prioritizes assessing the financial solvency of existing service providers before considering new applications.

FRA has granted 10 new licenses to companies engaged in micro-finance activity over the past two years. Currently, there are 6 applications under consideration. In total, there are 25 licensed companies in this sector. Additionally, approximately 10 NGOs have expressed interest in obtaining a license to operate in micro-finance activities.

In addition, FRA has issued 15 new consumer finance licenses, with approximately 4 applications currently under consideration. There are 30 licensed consumer finance companies.

The number of beneficiaries of microfinance activities has reached approximately 3.8 million, while the number of beneficiaries of consumer finance has reached about 1.9 million. The total financing value for microfinance stands at 56.2 billion pounds and for consumer finance, it is approximately 35.5 billion pounds.

To ensure the financial solvency and technological capabilities of non-bank financial institutions, FRA will soon announce a virtual community dialogue with companies engaged in non-bank financing activities. This dialogue will take place prior to the implementation of Basel III solvency standards.

In conjunction with this dialogue, FRA will review the extent to which companies operating in the non-bank financing sector have complied with the Authority’s decree regarding the minimum capital requirements. The current minimum capital requirement is 75 million pounds, with a higher requirement of 100 million pounds for real estate financing.

In this respect, FRA has issued Decree No. 184 of 2024 to suspend the acceptance of applications for establishing new consumer finance and micro- finance companies through traditional methods. This suspension will remain in effect for one year and may be renewed.

The new decree does not apply to companies or entities seeking to engage in micro-finance or consumer finance activities using financial technology (fintech) pursuant to Law no. 5 of 2022 regulating the development and use of financial technology in the non-bank financial activities (the “FinTech Law”).

In accordance with the said decree, suspension of new applications for consumer finance and micro-finance does not apply to companies, associations, or NGOs that have already established or obtained preliminary approval for these activities prior to October 11, 2024