Mohamed Omran, Chairperson of the Financial Regulatory Authority (FRA), revealed that they approved a draft law regulating the finance brokerage activity in the micro, small, and medium enterprises (MSMEs) sector.
The law stipulates creating a registry for those wishing to engage in finance brokerage activities. This aims to protect all parties, whether financing entities or individuals dealing with those entities, after demonstrating the practical application of the provisions of Law No. 141 of 2014.
Omran added that given the importance of MSMEs for the Egyptian economy, the draft law also included creating a registry for those wishing to engage in financial sponsorship activity.
He said that in order to protect the funds of the entities licensed to finance MSMEs, the authority’s board of directors sought to include a draft amendment to the provisions of the aforementioned law to criminalize using fraudulent methods to obtain financing from a company, association or civil institution licensed by the Authority to engage in the activity of MSMEs financing, in addition to criminalizing using the financing for any other purpose other the intended original one, or using any of these means to refrain from meeting financial liabilities under the contract concluded between the client and these parties.
He also revealed that the board of directors approved a legislative proposal to amend some provisions of the law regulating consumer finance activity, by creating a register with the authority to register those who wish to engage in the paid sponsorship activity. This aims to protect the rights of entities working in the field of consumer finance. This instills confidence and reassurance among involved parties and encourages pumping more funding and expanding activities in the Egyptian market, in light of the FRA supervisory role to ensure the safety and stability of non-banking financial markets, their regulation and development.
Omran explained that given the requirements of the law regulating consumer finance activity, including concluding contracts between consumer finance companies or providers of consumer finance with their clients and guarantees obtained by the financing bodies to secure their funds, these guarantees may be personal to facilitate finding individuals who sponsor financial obligations.