Central Bank issues UAE's first financial consumer protection framework

New measures are designed to improve the quality of information provided by financial institutions and provide a more effective way of settling disputes between banks and customers

The Central Bank of the UAE has issued the country’s first financial consumer protection regulatory framework to ensure the fair treatment and protection of banking customers. Ryan Carter / The NationShow more

The country’s first financial consumer protection regulatory framework to ensure the fair treatment and protection of banking customers is being issued by the Central Bank of the UAE.

The regulation provides a "broad spectrum of appropriate behaviour and conduct expected of licensed financial institutions", the regulator said on Monday.

“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,” Abdulhamid Saeed Al Ahmadi, governor of the UAE central bank, said.

“As a result, CBUAE has issued [the] UAE’s first comprehensive financial consumer protection regulatory framework that defines the relationship between the financial and banking service providers and consumers in order to ensure the protection of financial consumers and continued confidence in the sector.”

The new measures are designed to improve the quality of information provided by financial institutions about products and services, as well as offering a more effective and efficient way of settling disputes, the regulator said.

This includes a requirement for banks and financial institutions to put in place an independent and fair complaint resolution system to receive and address consumer complaints, it added.

The new regulation also requires banks to incorporate principles for responsible financing by ensuring consumers’ financial situations are "properly considered in determining an appropriate level of financing" to help customers avoid becoming over-indebted.

"The issuance of the Consumer Protection Regulation comes within the Central Bank’s keenness to promote transparency and fairness when licensed financial institutions deal with their consumers," Mr Al Ahmadi said.

"It will enhance competitiveness, integrity and stability of the banking and financial sector.”

The new measures provide a regulatory framework that clearly states the responsibilities banks have to their customers, allowing for effectual complaint management and dispute resolution, Philip King, global head of retail banking at Abu Dhabi Islamic Bank, said.

"These protective measures represent a progressive step to maintain high standards and continued confidence in the sector. It also promotes principles of transparency, fairness and financial inclusion that can have a positive and long-lasting socio-economic impact," he added.

"Throughout the Covid-19 pandemic, the Central Bank of the UAE has remained vigilant and active in protecting the rights and interests of consumers across a wide range of issues."

In March 2020, the UAE Central Bank launched the Dh50 billion Targeted Economic Support Scheme to support the UAE's economy through the pandemic, offering zero-cost collateral funding to banks as a way of keeping lending flowing to the broader economy. It extended the Tess programme to June this year as part of its efforts to continue supporting the economy.

The Tess scheme has helped more than 310,000 retail customers, nearly 10,000 small and medium-sized enterprises, and more than 1,500 private sector corporates, the central bank said in November.

In August last year, the Consumer Protection Department of the UAE Central Bank issued a new complaint management system and rulebook for consumers, who are required to first lodge their complaints with their respective banks.

If a bank has not responded to a customer complaint within 30 calendar days, consumers can then lodge their complaint with the Consumer Protection Department.