The Saudi Organization for Certified Public Accountants (SOCPA) has announced a ban on unlicensed financial consulting and new regulations
In a decisive regulatory move aimed at restructuring the professional services market in the Kingdom, the Saudi Organization for Certified Public Accountants (SOCPA) has mandated obtaining an official license to practice financial consulting (excluding securities), categorically prohibiting any unregulated activity in this field. SOCPA unveiled a comprehensive set of new regulations designed to strengthen oversight of the sector, enhance the quality of services provided, and protect clients from arbitrary or unprofessional practices that could harm the interests of investors and companies.
These moves come within a broader national context aligned with the goals of the Kingdom's Vision 2030, which focuses on raising standards of transparency and governance in the business environment and enhancing the efficiency of the financial and professional sectors. The financial consulting profession is a cornerstone in supporting sound economic decision-making for businesses; therefore, regulating it is an urgent necessity to ensure market stability and prevent unqualified individuals from offering advice that could lead to significant losses.
Localization of the profession and qualification requirements
The regulations approved by the board of directors of the Financial Regulatory Authority (FRA) stipulate that the practice of financial consulting will be restricted to full-time Saudi nationals , reflecting the Kingdom's commitment to empowering national talent in specialized sectors. The FRA has established strict and non-negotiable qualification requirements, including the necessity of possessing the appropriate academic qualification in finance or accounting, demonstrating documented practical experience, completing accredited training programs and relevant fellowship examinations, and formal registration as a member of the FRA before commencing practice.
Regarding current part-time practitioners, the Authority has set a timeframe for correcting the situation, stressing that they will not be allowed to continue providing consultations for more than three years, thus giving the market time to adapt to the new standards that require full-time commitment to ensure the quality of outputs and professional focus.
The difference between financial consulting and securities
It is important to note in this context that the Authority's regulations pertain to financial consulting services that do not fall under the jurisdiction of the Capital Market Authority (Securities Authority), such as feasibility studies, financial analysis of closed companies, financial restructuring, and financial valuation for purposes other than trading on the public market. This separation of responsibilities prevents regulatory duplication and addresses the gap that previously existed in the general business consulting market.
Strict penalties and increased transparency
To enhance professional discipline and deter violations, the Authority has adopted a graduated scale of penalties, starting with a written warning and escalating to temporary suspension of practice or permanent license revocation in cases of failure to meet eligibility requirements or repeated serious violations. These measures underscore the Authority's commitment to eliminating substandard practices from the market.
The new regulations also impose strict documentation requirements on licensees, mandating that draft reports and working papers be retained for a minimum of 10 years. This requirement represents a significant step forward in safeguarding rights, as it allows the Authority, regulatory bodies, and the judiciary to review the details of any financial consultation in the event of a future dispute. Furthermore, the Authority requires practitioners to provide it with detailed annual reports on the nature of the services offered and the beneficiaries, enhancing transparency, ensuring adherence to approved professional standards, and providing an accurate database on the size and nature of the consulting market in the Kingdom.
