a. The terms and phrases used in these Rules shall have the same meaning assigned thereto in the Finance Companies Control Law and its Implementing Regulations.
b. For the purpose of applying the provisions of these Rules, the following terms and phrases, wherever mentioned herein, shall have the meaning assigned thereto unless the context otherwise requires:
Rules: Rules on Outsourcing for Finance Companies.
Outsourcing: Any contract or agreement by which an external service provider undertakes to provide services to the finance company.
External Service Provider: Any service provider to whom an activity is outsourced. An External Service Provider can be a member of the group to which the finance company belongs, a related party, or an unrelated third party.
Material Functions: Any function that the default or disruption of which may have an impact on the finance company’s activities, reputation or the financial situation or if the outsourced functions include sharing, transferring, processing or storing data and information of consumers.
These Rules set the regulatory requirements for licensed finance companies under Finance Companies Control Law issued by Royal Decree No. (M/51) dated 13/08/1433H which have entered into or intend to enter into outsourcing contracts/agreements.
These Rules shall be read in conjunction with the Finance Companies Control Law and its Implementing Regulations in addition to the relevant laws, regulations, instructions, controls and rules.
The finance company shall establish and annually update a written outsourcing policy approved by the Board of Directors.
The finance company should establish appropriate internal controls and procedures to ensure compliance with these Rules.
The finance company shall verify the External Service Provider’s compliance with relevant laws, regulations and instructions. The finance company shall remain responsible if the External Service Provider shows lack of compliance with the applicable laws, regulations and instructions in any outsourced operations and tasks.
The finance company should ensure that all existing and proposed outsourcing contracts/agreements have been subject to a comprehensive risk review process at inception and renewal. This process should evaluate key risk factors, namely operational, legal, reputation and regulatory risks.