Financial advisory rules for non-securities in Saudi Arabia: Terms and penalties
In a move aimed at enhancing transparency and improving the efficiency of the financial sector in Saudi Arabia, the Saudi Organization for Certified Public Accountants (SOCPA) has approved regulations governing the financial advisory profession (excluding securities). This decision is part of ongoing efforts to regulate freelance professions and develop the investment environment in line with the objectives of Vision 2030, which seeks to create a reliable and professional business environment.
Context of the decision and its economic importance
These regulations are particularly important given the rapid growth of the Saudi economy, highlighting the critical need to separate the jurisdictions of financial market consulting (which falls under the purview of the Capital Market Authority) from general financial and accounting consulting, which is overseen by the Saudi Organization for Certified Public Accountants (SOCPA). This regulation aims to protect clients and companies from unprofessional practices and ensure that service providers possess the necessary scientific and practical competence, thereby enhancing confidence in the financial reports and consulting services offered to the private sector.
Licensing and professional competence requirements
The new regulations clearly stipulate that financial advisory services for non-securities matters may only be provided after obtaining the necessary license. The regulations make an exception for certified public accountants already licensed to practice accounting, who are automatically permitted to offer such advice. To ensure the quality of services, the Authority has established strict requirements for new applicants, most notably:
- The applicant must be a Saudi national and of full legal capacity.
- Obtain a bachelor’s degree in (Accounting, Finance, or equivalent) or an accredited diploma with completion of 91 study hours in related disciplines.
- Passing the tests and qualification programs decided by the authority.
- Provides at least five years of practical experience in the fields of auditing, accounting, or finance.
Practitioner Registry and Transparency
To enhance oversight, the Authority announced the creation of a register of licensed professionals, accessible to clients. This register includes detailed information such as the license number, issuance and expiry dates, and the name of the professional entity through which the consultant operates. This step aims to prevent impersonation and enable users to verify the legitimacy of consultants.
Licensing for part-time staff and scope of services
Within the framework of professional flexibility, the regulations allow for the licensing of part-time practitioners for a maximum period of three years, subject to specific conditions. The regulations also define the scope of services covered, excluding activities subject to other specialized licenses (such as securities). Furthermore, the regulations require practitioners to retain working papers and reporting records for a minimum of five years, emphasizing the necessity of accuracy, transparency, and the avoidance of issuing misleading reports.
Sanctions and accountability
The authority has established a clear framework for accountability in cases of regulatory violations, with penalties ranging from warnings to temporary suspension of practice for up to one year, and ultimately to permanent license revocation. The rules also guarantee practitioners the right to appeal to the Administrative Court, ensuring procedural fairness for all parties.
