UAE authorities seek to tighten the net on financial mis-selling

Insurance Authority has recognised "alarming amount of complaints” from investors

Mis-selling has been a hot topic in the UAE’s financial advisory sector in recent years.

The UAE Insurance Authority began a push to clean up how savings and investment schemes were sold in the Emirates in 2016 after the body “noticed an alarming amount of complaints” from policyholders who had seen their gains swallowed by high fees on insurance backed schemes.

A second draft circular from the authority, released in April 2017, reinforced plans to overhaul how the products, distributed to customers via financial advisory firms, are sold to investors.

The Central Bank of the UAE followed suit in May, urging banks and finance companies to resolve all outstanding mis-selling complaints “amicably” and within a deadline of just 90 days.

However, the final form regulations from the IA and the Central Bank are yet to be issued, something industry experts fear puts investors at risk of being mis-sold expensive fixed-term investment products.

"Every delay means another investor suffers," Gordon Robertson, the owner of Investme Financial Services, a Dubai fee-based financial advisory firm told The National in December. "Customers are not being protected right now because there is no disclosure and they are being fooled."

Peter Hodgins, an insurance lawyer at Clyde & Co in the UAE, said he expected the new regulations to be implemented in the first quarter of this year. However, he expects the delay in their implementation will encourage “churning” where advisers switch their clients between products to cash in on high commissions.

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