The Central Bank of the UAE (CBUAE) has issued a new Consumer Protection Regulation as a foundation of its new Financial Consumer Protection Regulatory Framework (FCPRF) which targets to ensure the lawful treatment and protection of consumers.
The new regulation backed by Decretal Federal Law No. 14 of 2018 Regarding the Central Bank and Organisation of Financial Institutions and Activities, which mandates CBUAE to frame regulations and detailed standards to protect the customers of Licenced Financial Institutions (LFIs).
The regulations set out key objectives to make sure that the consumer’s interests are being protected in their use of any financial product, service and relationship with LFIs.
The law offers a wide area of appropriate behavior and conduct expected from LFIs. The principles include several areas such as disclosure and transparency, institutional oversight, market conduct, business conduct and protection of consumer data and privacy.
Further, the principles possess responsibilities for conducting fair financial practices, complaint management and dispute resolutions, consumer education and awareness and financial inclusion and Shariah compliance for financial services.
The regulatory principles are supported by detailed standards, which ensure LFIs’ consistent application of these principles and act with integrity and fairness in the treatment of financial consumers.
“The financial sector in the UAE is growing and expanding in terms of diverse products and services and technology, all of which are adding to the complexity of making the right decision by consumers. As a result, CBUAE has issued UAE’s first comprehensive financial consumer protection regulatory framework that defines the relationship between the financial and banking service providers and the consumers to ensure the protection of financial consumers and continued confidence in the sector.”
The issuance of the Consumer Protection Regulation reflects the CBUAE’s keenness to enhance transparency and fairness in the deals between LIFs and its consumers. Further, it will enhance the competitiveness, integrity and stability of the banking and financial sector.
The new protective measures are designed to improve the quality of the information provided by financial institutions about products and services, to bring a more effective and efficient way of settling disputes including a requirement for each LFIs to set up a fair complaint resolution mechanism to receive and address consumer complaints.
To address concerns of indebtedness LFIs are to incorporate principles for responsible financing by making sure consumers’ financial situation are properly considered in determining an appropriate level of financing to be provided to the consumer.