Bank customers in the UAE will now receive greater protection against the mis-selling of savings, investment or life insurance policies under the latest regulatory crackdown.
The Central Bank of the UAE issued a circular this month advising banks and finance companies to resolve all outstanding mis-selling complaints "amicably" and within a deadline of just 90 days. It issued the circular in response to "an increasing number of complaints in relation to the savings and investment insurance/takaful products". The mis-selling complaints all have a common theme, with customers sold policies that are "complex in nature and are not well understood", according to the circular, seen by The National.
These contractual and fixed-term savings or investment plans have been created by the largest global insurance companies and have been criticised by experts as the most expensive financial products available anywhere in the world. These plans have not been licensed to be sold to consumers for many years now in countries like the United Kingdom.
In the circular, banks and finance companies were criticised for using inadequately trained staff to sell policies.
It stated: “We observed that staff who are marketing the products at the counter are neither well-trained to understand the risk profile of the customer nor have the ability to explain such products to the customers”. It also said that responses to ongoing complaints provided to its consumer protection department were not satisfactory.
The Central Bank now plans to issue a new governance structure on how to market these products, covering issues such as customer profiling and product suitability and transparency.
It may also introduce a mechanism to redress grievances with non-compliance charges for violating guidelines.
Until then, the Central Bank is refusing to approve requests from banks or finance companies to market or sell “savings and investment” and “non-capital guaranteed/protected takaful/insurance products”.
Banks that already have permission to market term life insurance and general insurance products can continue only where the employee has the requisite qualification and uses a system to assess the suitability of products for customers.
Nigel Sillitoe, the chief executive at the research and consultancy firm Insight Discovery, said that the Central Bank’s move “further demonstrates that there is a drive for better consumer protection and higher standards for advisors operating within the onshore financial services market”.
The clock has already started ticking on the 90-day deadline to resolve all outstanding complaints, which dates from the day the circular was issued, on May 11.
This is part of a wider clampdown on questionable sales practices, with the Insurance Authority announcing last month that it was pushing ahead with tough new regulations to offer UAE investors better protection against the mis-selling of these products by financial advisors.
Sam Instone, the chief executive at the financial advisor AES International, said the Central Bank’s clampdown is “fantastic news for UAE consumers” and combined with the Insurance Authority’s, is driving up financial standards.
“It constitutes a major clean-up, and should improve stability and confidence in the marketplace,” he said.
The National has received numerous letters in recent months from readers stung by the high costs of products sold to them via financial advisors. In February, The National gathered leading figures from the financial services industry, including some of the biggest financial advisory firms in the UAE, to garner their thoughts on the effectiveness of the contractual savings plans. It became clear from the discussion that these products are not always the best route for UAE residents to meet their financial goals.
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Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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UAE currency: the story behind the money in your pockets
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