The Financial Regulatory Authority (FRA) considers some amendments to the consumer finance law with the aim of providing cash financing, sources told Daily News Egypt.
The sources added that the amendments aim to find new financing solutions. This came after a series of meetings held by FRA with market parties over the past year, especially legal offices, to discuss the products that investors need during the coming period.
However, the amendments require the approval of the Central Bank of Egypt (CBE).
Mohamed Farid, Chairperson of FRA, issued Circular No. 1 on 20 February 2023 to prohibit authorizations to practice professions specialized in non-banking financial activities that are subject to the authority’s supervision and control.
The circular included the prohibition of persons obtaining a license from the Authority to practice professions specialized in non-banking financial activities from making any powers of attorney or authorizations for each other or for any other person to deal under those powers of attorney or on their behalf in the practice of specialized professional businesses licensed by the Authority. They must cancel any powers or authorizations that have been issued in this regard and take the necessary measures to stop working on them in order to avoid legal accountability resulting from this violation.
President Abdel-Fattah Al-Sisi approved new amendments to the Consumer Finance Activity Act last August, which added three new articles to the law in an effort to better protect consumers, borrowers in SMEs, and lenders from fraud.
The amendments approved by the House of Representatives last month stipulate that whoever uses fraud to refrain from implementing all or some of the prescribed financial obligations shall be punished with imprisonment and a fine of no less than EGP 5,000, and no more than twice the remaining amount of the financing value.
The amendments prohibit third parties from acting as paid intermediaries or sponsors between lenders, SMEs, and consumer borrowers without first registering with the FRA.
The amendments include other penalties of imprisonment and/or a fine of EGP 50,000 – 500,000. Banks will not be subject to the law because their activities are controlled by the CBE.