Banks and financial institutions in the UAE will have to process consumer complaints within a certain timeframe and also give clear reasons in writing on the matter under the new framework which the Central Bank is developing
The UAE Central Bank is developing the "Financial Consumer Protection Regulatory Framework", which it intends to move quickly in order to help consumers make choose the right products.
"The new regulation and standards establish set time frames in the processing of complaints that licensed financial institutions must comply with, as well as requiring institutions to provide clear reasons, in writing, as to their decision on a complaint matter," the Central Bank said in a statement to Khaleej Times.
The apex bank said the new framework will help consumers to make a quick and right decision amidst the growing and expanding financial sector in terms of new entrants and new products.
"Consumers will have a choice in attempting to resolve their own disputes under the proposed regulation. They will have the option of using the dispute resolution mechanism that their financial institutions have put in place," the Central Bank said, adding that the new regulation and standards will apply to all existing agreements, products and services of licensed financial institutions.
There are many other changes proposed in the draft consumer protection regulatory framework, including substantial improvement in the type and quality of disclosure and transparency; standards for complaint management to ensure timely responses to consumer complaints, and increase in consumer education and awareness, the apex bank said.
Under the new framework, banks and financial institutions must provide quality information that provide facts while advertisements and promotions also must provide pertinent information to consumers to make right decision.
Asad Ahmed, managing director, Alvarez & Marsal, in Dubai, said that consumer confidence in a banking sector will promote financial stability, growth, efficiency and innovation in the long term. Also, fitting consumer protection standards will abate the risks which financial institutions bear themselves.
"It is a welcome move, as central banks are beginning to play an increasingly active role in protecting consumers and this is primarily due to their desire to preserve confidence of the financial system," said Ahmed.
Fadwa Sahly, director for transformation advisory at Grant Thornton UAE, said that the global financial crisis has brought a lot of attention to consumer protection, and the UAE is moving towards convergence to international regulatory standards by emphasizing the principles of fair treatment, honesty and ease of access to financial products and services for consumers.
"This framework of regulation will enhance levels of transparency within the jurisdiction, improve consumer confidence and contribute to promoting the UAE as a fair and established market," said Sahly.
Source - Khaleej Times