Key Facts Statement: what your bank must show you before you borrow

A Key Facts Statement (KFS) is a short, stand-alone summary of a loan’s, card’s or other financial product’s rates, fees, key terms and risks. Central Bank of the UAE rules require licensed banks and finance companies to give you one before you take the product, as the first document in the sales process, and you sign to confirm you received it before you sign the contract.

Key takeaways

• Your bank must give you a Key Facts Statement before it provides a product, and also whenever you ask for one.
• It must be a stand-alone document, preferably within 2 pages, in plain language, with Warning boxes for key risks.
• For a loan it must show the expected annual rate, the possible fees, how interest is calculated and whether the rate is fixed or variable.
• Use the APR and the total cost, not the headline rate alone, to compare two offers.
• If the contract differs from the KFS, ask for a written answer before you sign; after signing you have 5 complete business days to withdraw, unless you waived that right in writing.

When you get a Key Facts Statement

You get it at the start: the KFS should be the first document a lender gives you in the sales process, before it provides the product, and the lender must also give you one if you ask.

When you get it

Before you sign

Lenders must give a Key Facts Statement before providing a financial product; it should be the first document in the sales process, and the consumer signs to acknowledge receiving it before signing the contract.

Each product a licensed institution sells, including insurance or takaful, needs its own KFS (Consumer Protection Standards, Article 2, clauses 2.1.1.19 to 2.1.1.21). Because you can ask for one, you can compare lenders before you apply. All disclosure information must be available in Arabic and English (clause 2.1.1.2).

The KFS is a summary, not the contract. The lender must give you the contract to read, with appropriate time to review it, before you sign, and free copies of every final document you signed (clauses 2.1.1.27 and 2.1.1.28). Your other rights are in your rights as a borrower and our other Borrower rights guides.

What every Key Facts Statement must contain

Whatever the product, a KFS must be a short, stand-alone document in plain language that sets out the rates, fees, key terms and risks in a font you can read.

Format of a Key Facts Statement

Stand-alone, preferably 2 pages

A Key Facts Statement must be a stand-alone, concise document (preferably within 2 pages) in plain language that describes the product accurately, states whether the lender can change the terms later and the notice it will give, sets out the rates, fees, key terms, obligations and limitations in a legible font, and uses Warning boxes to highlight key risks.

What each requirement in clauses 2.1.1.22 and 2.1.1.14 means on the page:

The Article’s credit product rules (section 2.1.3) also apply to Key Facts Statements, and most of the loan and card lines below come from them.

The lines that matter on a loan KFS

On a personal, car or home loan KFS, four areas need the closest reading: the rate, the fees and APR, the early settlement example, and any insurance or security. The KFS must show the expected annual interest or profit rate, any possible fees, the standard formula for computing interest or profit, and prominently whether the rate is fixed, variable or a mix (clause 2.1.1.22(h)).

Rate and how it is set

Check whether the rate is fixed or variable, then how interest is worked out. The lender must explain how interest or profit is calculated and from which date, give you an example, and show how each payment is split between balance and interest on the reducing balance (clause 2.1.3.4). If one offer quotes a flat rate, flat and reducing rates and the APR shows how to convert it.

Where the rate is a base rate plus a margin, the lender must disclose the two parts separately, explain the base rate with a clear example, and say how often the rate may be revised and where rates are published (clause 2.1.1.36). On a variable rate loan, the lender must also illustrate what a rate rise would do to your payments and the term (clause 2.1.3.6). If the base rate is EIBOR, see what EIBOR is.

Fees and the APR

The fee lines show what you pay on top of interest. The lender must disclose every fee, its amount and calculation, any third-party fees, and whether each is one-time or recurring, with how often and for how long (clauses 2.1.1.37 and 2.1.1.38).

Annual Percentage Rate

APR disclosed

Lenders must disclose the Annual Percentage Rate (APR), which includes the total interest or profit payable and other fees compounded over a year.

The expected APR is there so you can compare credit products and lenders on one figure (clause 2.1.3.2). The rules we read do not spell out whether insurance premiums count towards the APR, so ask each lender whether the APR on its KFS includes any insurance cost.

The written offer that follows must state the approved amount, all terms and, for financing with a set term, the total of all repayments at the starting rate and, separately, the total interest or profit (clause 2.1.3.9). Except for credit cards, you also get a full repayment schedule at signing (clause 2.1.3.11).

Early settlement example

If you might repay early, find the worked example. The lender must say whether early settlement is possible, which permitted fees apply, how they are calculated and when they are payable (clause 2.1.3.7), and the KFS must include a detailed example of the early settlement fee (clause 2.1.3.8). The steps are in settling a personal loan early and settling a car loan early, and the early settlement calculator works out the capped fee.

Insurance and security

Look for any condition that adds a cost or puts an asset at risk. If insurance or takaful is mandatory, the lender must explain its purpose, disclose its own policy’s cost in writing and let you choose the provider.

Choice of insurer

At least 3 insurers

Where insurance or takaful is a mandatory part of a credit or financing product, the lender must explain its purpose, disclose the cost of its own policy in writing and let the consumer choose a provider from at least 3 insurance or takaful providers the lender has approved.

If the loan needs security, a guarantor, a co-signer or collateral, the lender must say so before you sign, explain why, and set out its rights to dispose of pledged security (clause 2.1.3.3).

The lines that matter on a credit card KFS

A card KFS follows the same rules, so it must show the card’s rates, fees, key terms and Warning boxes. Five lines deserve a first look:

• Rate. Note whether it is quoted per month or per year. Your statements must show the annual rate separately (clause 2.1.3.19).
• Annual fee. Check whether it recurs and for how long (clause 2.1.1.38).
• Late payment fee. The Central Bank caps it, as shown below.
• Cash advances. The interest-free rule for cards does not cover them.
• Over the limit. A transaction that takes the card over its limit may be rejected and may incur fees, and the lender must tell you so (clause 2.1.3.18).

Maximum credit card late payment fee

AED 230

The late payment fee on a credit card is capped at AED 230.

The cap is stated before VAT (Regulation 29/2011, Appendix 2).

The line that matters most is how interest is charged when you do not pay in full. Pay the statement balance in full by the due date and the bank may not charge interest on it, cash advances excepted; after a part payment, interest runs on the outstanding balance from the due date until you pay (Standards, Article 7, clause 7.1.5.14). Ask for the bank’s example of this calculation. Each charge is explained in credit card interest and fees, and the credit card payoff calculator works through your own balance.

Islamic products

An Islamic bank must disclose each product’s Shari’ah basis and its approval by the Internal Shari’ah Supervision Committee, and the KFS should include the Shari’ah basis (clause 2.1.1.42). It shows a profit rate where a conventional KFS shows an interest rate, and the same rate, fee and APR rules apply. See Islamic and conventional finance and murabaha explained.

Using two Key Facts Statements to compare offers

Compare the APR and the total cost on each KFS and written offer, not the headline rate. A lower rate with an upfront fee can cost more than a higher rate without one.

Worked example

Two AED 50,000 personal loan offers over 48 months

Both offers are illustrations, on a reducing rate. Offer A: 6.5% a year with a processing fee of AED 1,000. Offer B: 7.0% a year with no fee.

1. Monthly instalment = P × r ÷ (1 - (1 + r)^-n), where P = AED 50,000, r = annual rate ÷ 12 and n = 48.
2. Offer A: r = 6.5% ÷ 12 = 0.5417%, so the instalment is AED 1,185.75. The 48 instalments add up to AED 56,915.89, which is AED 6,915.89 of interest. Adding the AED 1,000 fee: AED 6,915.89 + AED 1,000 = AED 7,915.89.
3. Offer B: r = 7.0% ÷ 12 = 0.5833%, so the instalment is AED 1,197.31. The 48 instalments add up to AED 57,470.99, which is AED 7,470.99 of interest, with no fee.
4. Difference: AED 7,915.89 - AED 7,470.99 = AED 444.90.

Totals are worked from the unrounded instalment.

Line	Offer A	Offer B
Annual rate (reducing)	6.5%	7.0%
Upfront fee	AED 1,000	None
Monthly instalment	AED 1,185.75	AED 1,197.31
Total interest	AED 6,915.89	AED 7,470.99
Interest plus fees	AED 7,915.89	AED 7,470.99

On these figures, Offer B costs AED 444.90 less over the 48 months, despite its higher rate.

This is the gap the APR is meant to show: because it includes fees, Offer A’s APR would sit above its 6.5% rate. Ask both lenders for a KFS on the same amount and term so the figures line up.

If you did not get a KFS, or the contract says something else

Ask for the statement, or a written explanation of any difference, before you sign. The lender must answer your questions about the terms and conditions in writing (clause 2.1.1.25).

If you spot a problem only after signing, the cooling-off period gives you time to withdraw; refunds and waivers are covered in your rights as a borrower.

Cooling-off period

5 business days

Consumers have a cooling-off period of 5 complete business days after signing a contract for a credit, insurance or other CBUAE-regulated product, during which they can withdraw without undue cost.

To complain, write to the lender first and keep a copy of what you send.

Acknowledgement of your complaint

2 business days

A bank or other licensed institution must acknowledge a written complaint within 2 complete business days.

If the lender’s final answer does not settle it, you can go to Sanadak, the independent ombudsman unit established by the Central Bank (Sanadak regulation, Article 2), which can reject a complaint not raised with the lender first (Article 4). See how to complain about a bank.

If a lender turns down your application, it must tell you why, unless the reason relates to financial crime compliance or the law prohibits disclosing it (clause 2.1.1.26). Our glossary has a short definition of the Key Facts Statement.