Notwithstanding the growing demand for establishing a coherent regulatory framework, historically, guidance on the regulatory aspects has never been provided. In the past, FCI has submitted guidance papers on specific attributes that would benefit an economy in implementing a regulatory framework. However, the absence of a global regulatory guide was a hindrance, and the IFC/World Bank took it upon themselves to create a comprehensive regulatory guide on factoring to fill this gap while promoting coordination between the private law and regulatory regimes.
The main objective of this Knowledge Guide is to provide guidance on law reforms seeking to support receivables finance and thereby promote sound and inclusive access to credit in emerging markets. It indicates options and advances recommendations to establish a cohesive regulatory framework for non-banking financial institutions (factoring companies) to extend funds upon the transfer of receivables (factoring activities). The primary audience of this document includes policymakers and decision-makers involved in the law reform process, such as officials at central banks, supervisory authorities, and governmental departments, including the staff of the World Bank and donor institutions.
This Knowledge Guide represents a point of reference for reforms and present and future harmonization projects pertaining to an area of critical importance for attaining inclusive economic growth and sustainable development.
Last year, during the FCI 55th Annual Meeting in Marrakech, the IFC unveiled its ‘Knowledge Guide on Factoring Regulation and Supervision’, and it is now available to download.
Download the report by visiting https://www.ifc.org/insights-reports/2024/knowledge-guide-on-factoring-regulation-and-supervision
This Knowledge Guide is divided into six sections and one annex:
Section I: examines the increasingly important role of factoring, including within supply chains, in facilitating access to credit for MSMEs.
Section II: considers the main regulatory trends that are driving the demand for the establishment of a comprehensive regulatory regime for factoring.
Section III: provides guidance for policymakers and law reformers to establish a comprehensive legal and regulatory framework for factoring activities.
Section IV: indicates how factoring activities can be supervised under different governance models and indicates the authorization requirements for financial institutions to undertake factoring activities.
Section V: focuses on prudential regulation and indicates the key components of a prudential framework for factoring companies.
Section VI: concerns the conduct of business regulation applicable to factoring companies.
Annex I: provides a template structure for a legislative instrument that combines within the same statutory instrument both private law and regulatory elements.
Download the report by visiting https://www.ifc.org/insights-reports/2024/knowledge-guide-on-factoring-regulation-and-supervision
Discover more
- Discover the FCI Legal Study on Factoring here.
- Explore other publications, guides and reports on Factoring, Receivables Finance and Supply Chain Finance via our Literature page here.
- Factoring in the Foundations: UNIDROIT's Model Law on Factoring and IFC's Knowledge Guide in Marrakech, read more by clicking here.