One of the Central Bank’s objectives, as mandated by the Decretal Federal Law No. 14 of 2018 Regarding the Central Bank & Organization of Licensed Financial Institutions and Activities, is to establish Regulations and Standards for protection of Consumers of Licensed Financial Institutions. This Regulation and the accompanying Standards are issued pursuant to the powers vested to the Central Bank according to Article (121) of the aforementioned Decretal Federal Law.

This Regulation is intended to ensure protection of Consumers’ interests in their use of any financial product and/or service or relationship with Licensed Financial Institutions. This Regulation is principles based and provides a broad scope of conduct expected from Licensed Financial Institutions. The Regulation will be supported by Standards whereby the Central Bank will define regulatory requirements to ensure consistent interpretation and implementation of this Regulation.

By introducing this Regulation & the accompanying Standards, the Central Bank will ensure that the Licensed Financial Institutions’ approach to Consumer Protection is in line with international standards. This Regulation and the accompanying Standards establish the overarching Regulatory framework for Licensed Financial Institutions in relation to Consumer protection in and of Licensed Financial Institutions in the State. These Regulations & the accompanying Standards must be interpreted in conjunction with other regulations, including but not limited Shari’ah compliance regulations.

The primary objectives of the Regulation is to protect Consumers and contribute to the overall stability of the Financial Services industry. The Regulation and supporting Standards promote a culture within Licensed Financial Institutions of respecting and acting in the best interest of Consumers and specifically aim to protect Consumers by defining the Institutional obligations for the protection of Consumers that include:

• Setting standards of Business and Market conduct by Licensed Financial Institutions.
   
• Strengthening the governance and oversight over the design, promotion and sale of Financial Products and/or Services;
   
• Promoting responsible financing practices to protect consumers from becoming over indebted;
   
• Ensuring the quality and timing of effective disclosure to consumers by Licensed Financial Institutions regarding matters and/or risks that may affect a Consumer’s decision to purchase a Financial Product and/or Service;
   
• Providing Consumers with the access to the right information at the right time to provide the Consumer the opportunity to make informed decisions;
   
• Addressing unreasonable barriers and limits to fair competition and Consumer choice;
   
• Implementing clear and reasonable mechanisms by Licensed Financial Institutions for redress of Consumer Complaints;
   
• Improving Consumers’ knowledge, awareness and ability to assess Financial Products and/or Services; and
   
• Promoting inclusions for all segments of society by eliminating unreasonable barriers or practices that limit access to Financial Products and/or Services.

This Regulation and accompanying Standards apply to all Licensed Financial Institutions licensed by the Central Bank in relation to their activities specified in Article 65 of the Decretal Law No. 14 of 2018 Regarding the Central Bank & Organization of Licensed Financial Institutions and Activities in provision of Financial Products and/or Services to Consumers that are Natural Persons and Sole Proprietorships.

This Regulation and the accompanying Standards are in addition to any requirement of any other regulatory authority as applicable to Licensed Financial Institutions. In case of any conflict with such requirement, the provisions of this Regulation and accompanying Standards will prevail.

Where this Regulation or its accompanying Standards include requirements to provide information or take certain measures or to address certain items listed as a minimum, the Central Bank may impose requirements that are additional to the listing provided in the relevant Articles.

The Central Bank’s Financial Consumer Protection Department may issue further guidance relating to the Regulation and Standards.

For the purposes of this Regulation, words and expressions shall have the usual meaning assigned to, unless the context requires otherwise, as mentioned below and/or defined in other Laws and Regulations:

1. Advertising: The activity of marketing, designing, producing and/or packaging information about a Licensed Financial Institution and its Financial Products and/or Services for the purpose of public display, including financial promotion to recruit new Consumers and/or induce existing Consumers to try Financial Products and/or Services.
    
2. Advice: Specific Advice:
   
   Specific Advice on Financial Products or Services includes any method of communication that:
    
   1. provides an opinion, evaluation, recommendation, and / or biased information / comparisons to a Consumer or when acting as a Consumer’s agent; and
       
   2. the Advice or actions could reasonably be regarded as having the intent to influence a Consumer’s choice or decision to select, buy, sell, hold, subscribe to a particular financial product/service, related options or an interest in a particular financial product/service.
   
   Generic Advice:
   Giving Generic Advice in any newspaper, journal, magazine, broadcast service, education initiatives or similar service in any medium if the principal purpose of the publication or service, taken as a whole, is neither:
      
   1. that of giving advice of the kind specified in the Specific Advice definition; nor
       
   2. that of leading or enabling Consumers to buy, sell, subscribe for a particular financial product/service of the kind in Specific Advice.
       
3. Annual Interest/Profit Rate: The annual amount to be paid by a Borrower / Financee as expressed as a percentage of the total amount of the credit facility.
    

   The annual amount earned by a Consumer and expressed as a percentage of the total amount of a deposit, investment and other financial product.

4. Annual Percentage Rate (APR): The percentage of the total amount that a Borrower owes to a Lender including cost of other Fees charged by the Lender annually for the Borrower to use the Lender's funds or asset, or charged by a Financier to a Financee as part of price/rental, due to the Financee’s purchase or renting of asset from the Financier.
    
5. Applicable Laws: Applicable UAE Laws and amendments thereof.
    
6. Arrears: The state of being behind in the discharge of obligations, an unfinished duty and or an unpaid and overdue debt in accordance with the loan/financing contract, by the scheduled due date.
    
7. Authorized Agents: Authorized Agent is a commercial representation by a contract pursuant to which the authorized agent undertakes to enter into transaction in the name and for the account of the Licensed Financial Institution and the Licensed Financial Institution shall be liable for any transactions and contracts entered into by the authorized agent within the limits of the authority conferred to the authorized agent by the Licensed Financial Institution.
    
8. Base Lending Rate: Interest rate that is set as a benchmark against which Credit Facilities are to be priced and re-priced.
    
9. Board: A Licensed Financial Institution’s Board of Directors (Owner/Partners in the absence of a Board of Directors).
    
10. Borrower / Financee: A Consumer to which a Licensed Financial Institution provides Credit as a Service and/or Product.
     
11. Call-back: A follow-up call to a Consumer that a Licensed Financial Institution conducts to assess whether a Consumer has received and understood the disclosures of a Product and/or Service provided by the Licensed Financial Institution.
     
12. Central Bank: The Central Bank of the United Arab Emirates.
     
13. Complaint: An expression of dissatisfaction by a Consumer with a product, service, policy procedure or actions by the Licensed Financial Institution that is presented to an Employee of the Licensed Financial Institution in writing or verbally.
     
14. Commitment to Donate: The practices related to the customer’s commitment to donate to a third party due to late payment of a due amount in a financing arrangement.
     
15. Compliance of an IFI with Islamic Shari’ah: Compliance of an IFI with Islamic Shari’ah refers to compliance with Shari’ah in accordance with:
     
    1. resolutions, fatawa, regulations, and standards issued by the Higher Shari’ah Authority (HSA) in relation to licensed activities and businesses of IFIs (“HSA’s Resolutions”); and
        
    2. resolutions and fatawa issued by ISSC of respective IFI, in relation to licensed activities and businesses of such institution (“the Committee’s Resolutions”), provided they do not contradict HSA’s Resolutions.
        
16. Conflict of Interest: A Conflict of Interest occurs when the interests of a client are at odds with the interests of the firm, an employee or another client.
     
17. Consumer: A Consumer is a customer for the purpose of this Regulation and the accompanying Standards. A Customer is any Natural Person or Sole Proprietor who obtains or may prospectively obtain Financial Services and/or Products – with or without charge – to satisfy his/her personal need or others’ needs.
     
18. Cooling-off Period: A period of time after agreeing to the Product and/or Service that allows a Consumer to reconsider the purchase and to withdraw from the Contract without suffering any undue costs, obligations or inconvenience. The Cooling-off Period begins immediately after signing of the contract.
    
    For Shari’ah compliant products and services, relevant Shari’ah standards for reconsideration by the Consumer may apply.
     
19. Credit Information Agency: Al Etihad Credit Bureau and any credit information agency established for the purpose of credit reporting requirements.
     
20. Credit Products: Products that provide funding including any advance, loan/financing or other facility in whatever form, including the giving of a guarantee or undertaking of any surety obligations for a Consumer.
     
21. Data/Personal Data: A collection of organized information, facts, concepts, instructions, observations or measurements, in the form of numbers, alphabets, symbols, images or any other form, that are collected, produced, or processed by Licensed Financial Institutions.
    
    Personal Data is any information relating to an identified natural person or identifiable natural person. "Identifiable natural person" is defined as a natural person who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to their biological, physical, biometric, physiological, mental, economic, cultural or social identity.
     
22. Decretal Law: Decretal Federal Law No. (14) Of 2018 Regarding the Central Bank & Organization of Financial Institutions and Activities.
     
23. Deposit Products: Deposit Products include savings accounts, current accounts, digital accounts, term deposits, cheques, banking and payment wallets and related stored value cards.
     
24. Digital Channels: Internet, mobile phones, Automated Teller Machine (ATMs), Point of Sale (POS) terminals, mobile applications, or other similar digital channels.
     
25. Disposable Income: A person’s Income after taking into account basic personal expenses, net interest/profit and dividends received and the payment of taxes and social contributions.
     
26. Early Settlement Fee: A Fee charged by a Lender/Financier to a Borrower / Financee who terminates a Credit Facility by paying the outstanding amount before a date specified in the contract.
     
27. Error: An outcome of an action that is contrary to an agreement, understanding or documented policy or operational and control procedures, which has a financial or other effect on one or more Consumers.
     
28. Fee: Any fees, charges, penalties and commissions incurred on a Product and/or Service.
     
29. Financial Crime Compliance: Financial Crime Compliance is the requirement to comply with, including and not limited to, all applicable fraud, anti-money laundering, counter-terrorism financing, sanctions, bribery and corruption laws, rules and regulations.
    
    For the sake of clarity, this Regulation / accompanying Standards do not impose, reduce or modify any requirements pertaining to the compliance with all laws, rules and regulations relating to Financial Crime Compliance.
     
30. Financial Products and/or Services: Products and/or Services (including stored value facilities) provided by Licensed Financial Institutions, with or without charge, through their Financial Activities. It will be referenced to as Products and/or Services in this Regulation.
     
31. Higher Shari’ah Authority (HSA): An authority that determines rules, standards, and general principles applicable to Shari’ah compliant businesses and Licensed Financial Activities, and supervises and oversees the Internal Shari’ah Supervision Committees in accordance with the Decretal Federal Law No. (14) of 2018, Regarding the Central Bank & Organization of Financial Institutions and Activities.
     
32. Financial Complaint Resolution Mechanism: A Complaint resolution system provided by Licensed Financial Institutions for the purpose of resolving Consumer Complaints.
     
33. Internal Shari’ah Supervision Committees (ISSC): A body appointed by an IFI, comprised of scholars specialized in Islamic financial transactions, which independently supervises transactions, activities, and products of the IFI and ensures they are compliant with Islamic Shari’ah in all its objectives, activities, operations, and code of conduct.
     
34. Islamic Financial Institution (IFI): The Licensed Financial Institutions that conduct all or part of their activities and businesses in accordance with the provisions of Islamic Shari’ah.
     
35. Key Facts Statement: A concise and user-friendly summary, in plain language, of the key features and risks of a Product and/or Services for a Consumer.
     
36. Lender/Financier: A Licensed Financial Institution that provides Credit as a Service and/or Product to its Consumers in any manner or method.
     
37. Licensed Financial Activities: The financial activities subject to Central Bank licensing and supervision as specified in Article (65) of the Decretal Federal Law No. (14) of 2018.
     
38. Licensed Financial Institutions: Banks and other financial institutions licensed in accordance with the provisions of the Decretal Federal Law No. (14) of 2018, to carry on a Licensed Financial Activity or more, including those which carry on the whole or a part of their business in compliance with the provisions of Islamic Shari’ah, and are either incorporated inside the State or in other jurisdictions, or have branches, subsidiaries or Representative Offices inside the State.
     
39. Market: The financial Market where Licensed Financial Institutions promote and/or sell Financial Products and/or Services and compete for Consumers.
     
40. Market Conduct: Market Conduct is the focus on Licensed Financial Institutions' Market place actions, behavior and practices that are applied in providing Financial Products and/or Services to the market.
     
41. Minority Group: A category of people who experience relative disadvantage as compared to members of a dominant social group, Minority Group membership is typically based on differences in observable characteristics or practices, such as ethnicity, race, religion or determination.
     
42. Mumatil: With respect to Shari’ah transactions, it is a debtor who refuses to pay a debt that is due, without any legitimate reason after receiving demand for payment.
     
43. Outsourcing: An agreement with another party either within or outside the UAE, including a party related to the Licensed Financial Institution, to perform on a continuing basis an activity which currently is or could be undertaken by the Licensed Financial Institution itself.
     
44. Partial Settlement Charge: A fee levied by the Licensed Financial Institution on the Consumer in the event that the amount of the loan/financing is repaid in part before a date or event.
     
45. People of Determination: A person suffering from a temporary or permanent, full or partial deficiency or infirmity in his physical, sensory, mental, communicational, educational or psychological abilities to an extent that limits his possibility of performing the ordinary requirements.
     
46. Permissible: Any action that is specifically permitted by regulation or standards, or any actions which the Consumer is allowed by laws, rules and regulations to agree to and is confirmed by expressed consent.
     
47. Person: A natural or juridical Person, as the case may be.
     
48. Reducing Balance Method: An interest/profit amount calculation method where the interest/profit to be paid by the Borrower / Financee is based on the outstanding loan/credit amount after periodic repayments/payments.
     
49. Regulation: The term includes any resolution, legislation, circular, rule, instruction, standard or notice issued by the Central Bank.
     
50. Regulatory Supervision: Supervision of Licensed Financial Institution by the Central Bank.
     
51. Retail Operations: A Licensed Financial Institution’s operational practice in the design, production, promotion, sales and distribution of its Financial Products and/or Services to Consumers.
     
52. Senior Management: The executive management of the Licensed Financial Institution responsible and accountable to the Board (or Owner/Partners where there is no Board of Directors) for the sound and prudent day-to-day management of the Licensed Financial Institution, generally including, but not limited to, the chief executive officer, chief financial officer, chief risk officer and heads of the compliance and internal audit functions.
     
53. Sole Proprietorships: A legal entity for the undertaking of commercial or professional activities owned and operated by a natural person, who is in complete control of the business operations and profits and bears personal unlimited liability. For clarity, a Sole Proprietorship is not a limited liability company, LLC.
     
54. Staff: One or more employee(s) of the Licensed Financial Institution or third parties acting in any capacity for or on behalf of the Licensed Financial Institution.
     
55. State: The United Arab Emirates.
     
56. Stored Value Facility (SVF): A facility (other than cash) for or in relation to which a Customer, or another person on the Customer’s behalf, pays a sum of money (including Money’s Worth such as values, reward points, Crypto-Assets or Virtual Assets) to the issuer, whether directly or indirectly, in exchange for:
     
    1. the storage of the value of that money (including Money’s Worth such as values, reward points, Crypto-Assets or Virtual Assets), whether in whole or in part, on the facility; and
        
    2. the “Relevant Undertaking”. SVF includes Device-based Stored Value Facility and Non-device based Stored Value Facility.
        
57. Suspicious Transactions: Any transaction, attempted transaction, or funds which a Licensed Financial Institution has reasonable grounds to suspect as constituting in whole or in part, and regardless of the amount or the timing any of the following:
     
    1. The proceeds of crime (whether designated as a misdemeanor or felony, and whether committed within the State or in another country in which it is also a crime);
        
    2. Being related to the crimes of money laundering, the financing of terrorism, or the financing of illegal organizations;
        
    3. Being intended to be used in an activity related to such crimes.
        
58. Systemic Error: Error that affects a group in a similar manner and to a similar magnitude.
     
59. Third Party: Any person, group of persons or organization external to, and not a related party to, a Licensed Financial Institution.
     
60. UAEPNG System: The Persona Non Grata System established by the Central Bank.
     
61. Unauthorized Transaction: Unauthorized transaction includes the execution of payment instruction without explicit authentication or authorization from the consumer and incorrectly executed payment transactions.
     
62. Undue Pressure: Any practice, communication or action that could be reasonably considered excessive or persistent in the circumstances.
     
63. Writing: For any requirement of communications and signatories, declarations, consents, agreements or other instruments/requirements in writing, for the sake of clarity, these terms applies to electronic, digital and paper based insofar an Electronic Document or Record satisfies the requirement of the provision of Federal Law No. (1) of 2006 are complied with.
     
64. Year: The Gregorian calendar year.

2.1 Disclosure

2.1.1 Introduction

Quality, accuracy, completeness and effectiveness of the information provided to Consumers are fundamental to an open, transparent and competitive Market. Consumers must be proactively provided with all the information necessary to make an informed decision regarding Financial Products and/or Services.

2.1.2 Description

1. 2.1.2.1 A Licensed Financial Institution’s Board and Senior Management are responsible for providing direction and oversight to ensure that good disclosure practices for Financial Products and/or Services are adopted throughout the institution.
    
2. 2.1.2.2 Information must be provided in a proactive and transparent manner to allow a Consumer sufficient time to understand the information, including the terms and conditions.
    
3. 2.1.2.3 Licensed Financial Institutions must use specific disclosure mechanisms, including warnings, to inform Consumers of the key characteristics of and limitations on the product and/or service including associated risks, costs, fees, interest/profit rates, tenor, locked terms, or other pertinent issues relating to the product and/or service.
    
4. 2.1.2.4 Licensed Financial Institutions must provide effective disclosure at all stages of the relationship with the Consumer. Consumers must be made aware in advance of any permissible change in terms and conditions through all stages of the relationship.
    
5. 2.1.2.5 Licensed Financial Institutions must not provide only partial or biased disclosure to entice a Consumer by limiting the initial disclosure material that only presents the positive aspects of the product and/or service and only then disclosing the full characteristics of the product at the point of sale or post-sale, a point at which the Consumer may feel obligated to complete the transaction(s) or do not have a recourse to exit the Product and/or Service post-sale.
    
6. 2.1.2.6 Licensed Financial Institutions must continuously monitor and improve the effectiveness of its disclosures with techniques including and not limited to Complaint analysis and Consumer satisfaction surveys.
    
7. 2.1.2.7 The information must be disclosed in plain language that is accessible and communicated in terms that are easily understandable.
    
8. 2.1.2.8 Information must be available in both official languages English & Arabic.
    
9. 2.1.2.9 The method or manner of disclosure must be adjusted to meet the capabilities and level of understanding of the Consumer.
    
10. 2.1.2.10 Licensed Financial Institutions must ensure the accuracy of all disclosures made including the verification and correctness of statement and any related calculation, assumption or reference.

2.2 Transparency

2.2.1 Introduction

Transparency is positive conduct, which complements Disclosure. Transparency goes beyond the simple act of disclosure regarding a product and/or service provided to a Consumer. It means that Licensed Financial Institutions must proactively provide useful information and advice in the Market.

2.2.2 Description

1. 2.2.2.1 Licensed Financial Institutions must provide practical and suitable options to help Consumers make informed decisions that are in Consumers’ best interest including assessment of affordability and suitability.
    
2. 2.2.2.2 Licensed Financial Institutions must promote, sell, distribute and manage Financial Products and/or Services in a responsible manner. Licensed Financial Institutions must not knowingly benefit from Consumers’ ignorance or apathy as to, including and not limited to, possible choices, the impact of risks, affordability, suitability, Conflict of Interest with the Staff.
    
3. 2.2.2.3 Licensed Financial Institutions must take necessary steps to ensure that Consumers are made aware of and understand the proposed terms & conditions prior to the final stage of the sales process or the time of signing of the agreement.
    
4. 2.2.2.4 Licensed Financial Institutions must be transparent in their pricing and product structure.

2.3 Responsible Advertising and Marketing

2.3.1 Introduction

Advertising and marketing can utilize multiple channels to access the public for the promotion of a Licensed Financial Institution and its Products and/or Services. Advertising issued by Licensed Financial Institutions must not be deceptive, misleading, fraudulent or unfair and must be easily understandable by a Consumer. All text and numbers must be clearly visible and understandable.

2.3.2 Description

1. 2.3.2.1 Advertising and marketing activities and promotional materials must be designed, delivered and clearly identified as a financial promotion.
    
2. 2.3.2.2 Licensed Financial Institutions must not make any representation, omission, or engage in any Advertising and marketing activity that is likely to be deceptive, misleading, fraudulent or unfair.
    
3. 2.3.2.3 Licensed Financial Institutions must not exaggerate the advantages of a product and/or service or present the information in a confusing manner. This includes general impressions conveyed through words, pictures, digital images, audio and/or video, and the use of disclaimers not clearly and prominently disclosed and displayed.
    
4. 2.3.2.4 All Advertising and marketing material must be in plain and understandable language.
    
5. 2.3.2.5 The Regulation and accompanying Standards apply to any Advertising and marketing activity through all channels, including and not limited to branches, television, radio, website, mobile applications, automated teller machines (ATMs), telephone banking, account statements, social media and public media comprised of any form of audio, visual and print content.

3.1 Institutional Oversight

3.1.1 Introduction

The Central Bank expects Licensed Financial Institutions to be effectively managed by establishing an appropriate organizational structure, a supportive and constructive corporate culture; engaging well-qualified staff, defining clear policies and procedures, creating proper monitoring and controls supported by proper overall governance. The principle is to promote positive institutional conduct in serving all Consumers fairly.

3.1.2 Description

1. 3.1.2.1 The Central Bank requires Licensed Financial Institutions to have robust management oversight and responsibility structures in place for their activities including design, development, promotion, sales and distribution of products and/or services; compliance, risk and audit controls; up to date policies, procedures and training; engagement of qualified staff.
    
2. 3.1.2.2 Licensed Financial Institutions’ Board and Senior Management are required to instil a Consumer- focused corporate culture that will treat the Consumer fairly. The Licensed Financial Institution must actively monitor, identify, respond and address misconduct and potential Market Conduct risks.

3.2 Governance of Retail Operations

3.2.1 Introduction

Licensed Financial Institutions’ governance and management oversight structures must establish and maintain the level of integrity in the Market that both Consumers and the Central Bank expect. Governance of retail operations must be appropriate, properly implemented and maintained to ensure Consumer needs, suitability and affordability are properly assessed. Consumers are to be provided the right products and/or services to meet their needs and their ability to accept risk.

Licensed Financial Institutions must ensure Consumer financial assets, information and all Data are secure and protected.

3.2.2 Description

1. 3.2.2.1 Licensed Financial Institutions must have strong governance and effective management oversight in place over the design, development, promotion, sales and distribution, and the ongoing review and changes of Financial Products and/or Services.
    
2. 3.2.2.2 Licensed Financial Institutions offering or promoting Shari’ah compliant products and/or services must ensure compliance with Shari’ah governance which is set out in more detail by separate Regulation issued by the Central Bank.
    
3. 3.2.2.3 Licensed Financial Institutions must have effective controls, strong security and monitoring of transactions and activities of staff.
    
4. 3.2.2.4 All Licensed Financial Institutions must maintain up to date policies and procedures, systems and controls that fully comply with the requirements specified within this Regulation and its accompanying Standards.
    
5. 3.2.2.5 Licensed Financial Institutions must have and be able to demonstrate a corporate culture of Consumer service, fairness, transparency, ethical business conduct and effective disclosure.
    
6. 3.2.2.6 Licensed Financial Institutions must promote compliance with this Regulation and accompanying Standard in retail activities through policies, procedures, training, systems and controls including and not limited to Complaint handling and Complaint resolution, Consumer education, compensation and practices in sales and advisory services.
    
7. 3.2.2.7 Licensed Financial Institutions must ensure that all Authorized Agents comply with the applicable Articles of this Regulation and the accompanying Standards.

4.1 Responsible Market Conduct

4.1.1 Introduction

Licensed Financial Institutions must uphold the integrity of the financial Market through responsible Market activities which contributes to the overall stability of and confidence in the financial system.

Licensed Financial Institutions must sell and provide Consumers with appropriate products and/or services in accordance with the principles of this Regulation.

4.1.2 Description

1. 4.1.2.1 Licensed Financial Institutions must monitor and uphold high ethical practices in the Market.
    
2. 4.1.2.2 Licensed Financial Institutions must prohibit and prevent abusive sales, marketing and pricing practices.
    
3. 4.1.2.3 Licensed Financial Institutions must promote disclosure, transparency and a fair and competitive Market without discrimination.
    
4. 4.1.2.4 Licensed Financial Institutions must not create unreasonable barriers that unfairly limits access to Financial Products and/or Services by Consumers.
    
5. 4.1.2.5 Independent control functions within Licensed Financial Institutions must be competent in the application of Market Conduct principles set out in this Regulation and accompanying Standards set out by the Central Bank.

4.2 Promoting Competition

4.2.1 Introduction

The Regulation aims to promote a competitive Market by improving the freedom of choice through transparency, eliminating unreasonable and unfair barriers to competition, and requiring access to comparative information on product and/or services. The consistent application by Licensed Financial Institutions of Market Conduct principles will ensure ethical practices in Advertising and selling appropriate products and/or services and Consumer treatment throughout the lifecycle of engagement with the Licensed Financial Institution.

4.2.2 Description

1. 4.2.2.1 Licensed Financial Institutions must provide Consumers with accurate, sufficient and consistent information to easily understand and to be able to compare products and/or services offered by other Licensed Financial Institutions.
    
2. 4.2.2.2 Licensed Financial Institutions must not impose practices or barriers that prevent Consumers from easily switching their relationship(s) between Licensed Financial Institutions at reasonable and disclosed costs.
    
3. 4.2.2.3 Licensed Financial Institutions must not collude to fix features, pricing or terms to the detriment of Consumers and the Market.
    
4. 4.2.2.4 Licensed Financial Institutions must not use misleading or incomplete information to promote an advantage of their Financial Products and/or Services over other competitors.

5.1 Responsible Business Conduct

5.1.1 Introduction

Responsible business conduct is based on the internal culture and behaviour of Licensed Financial Institutions. Appropriate Business conduct instils a culture of integrity and ethics in its services and activities including product design, development, promotion, sales, distribution, lending / providing finance practices; minimizing Conflict of Interest and Consumer risks; and from a broader perspective, improving the financial wellbeing of its Consumers.

5.1.2 Description

1. 5.1.2.1 Licensed Financial Institutions must act, with due skill, care and diligence, fairly, honestly and professionally in their relationship with Consumers.
    
2. 5.1.2.2 Licensed Financial Institutions must establish and maintain effective policies, procedures, systems and controls to avoid any potential, perceived or actual Conflict of Interest.
    
3. 5.1.2.3 For inherent conflicts of Interest, Licensed Financial Institutions must have controls in place and must provide full and proper disclosure to Consumers prior to any agreements or commitments.
    
4. 5.1.2.4 Licensed Financial Institutions must ensure ethical behaviour of staff towards Consumers by developing an internal code of conduct for the staff, providing regular training, and monitoring Complaints.
    
5. 5.1.2.5 Licensed Financial Institutions must ensure that the staff who directly interact with Consumers will:
    
   1. Competently, efficiently and professionally discharge their duties and provide prospective and existing Consumers with the information and services they are entrusted to provide or sell.
       
   2. Have sufficient knowledge of products and/or services required to help and educate Consumers.
       
   3. Have the professional qualifications at all times necessary to provide Advice and carry out transactions.
       
6. 5.1.2.6 Licensed Financial Institutions must adopt remuneration and staff appraisal policies with the aim of preventing mis-selling, unreasonable risk-taking, Conflict of Interest or other irresponsible conduct. Such policies must not incentivize unethical practices and must reward positive conduct.
    
7. 5.1.2.7 Licensed Financial Institutions are responsible for the actions of their staff. Licensed Financial Institutions’ must maintain appropriate monitoring of staff in relation to its standards of business conduct and ensure full compliance with codes of conduct, laws and regulations.
    
8. 5.1.2.8 Licensed Financial Institutions must not adopt abusive or unreasonable contractual terms.
    
9. 5.1.2.9 Licensed Financial Institutions must monitor for misleading or aggressive sales practices and exploitation of Consumers due to their vulnerabilities, apathy or lack of knowledge.
    
10. 5.1.2.10 Licensed Financial Institutions must monitor and identify Borrowers / Financees facing difficulties in servicing their debt and, upon the Borrower’s / Financee’s request, designate a Credit counsellor to assist the Borrower / Financee in managing their indebtedness. Licensed Financial Institutions must inform Borrowers / Financees who are delinquent as to the availability of qualified Credit counsellors.

5.2 Fair Treatment of Consumers

5.2.1 Introduction

This Regulation aims to address the gap between the level of the public’s financial literacy and the complexity and risks of the Financial Products and/or Services being offered.

5.2.2 Description

1. 5.2.2.1 All Consumers must be treated equitably, honestly and fairly at all stages of their relationship with Licensed Financial Institutions. Treating Consumers fairly must be an integral part of the good governance, business conduct and corporate culture of all Licensed Financial Institutions.
    
2. 5.2.2.2 Licensed Financial Institutions must provide clear and understandable information to Consumers to ensure they are explained their rights and responsibilities with respect to the products and/or services, including the right to have their problems or Complaints addressed in an efficient, effective and respectful manner.
    
3. 5.2.2.3 Licensed Financial Institutions must not restrict Consumer’s choices, such as tied selling and bundling of products and/or services.
    
4. 5.2.2.4 Licensed Financial Institutions must not benefit from their Errors. Errors must be rectified without undue delay upon identification. Consumers affected by an Error must be immediately informed in writing of the cause, impact and rectification of Errors.
    
5. 5.2.2.5 Licensed Financial Institutions must establish clear standards and procedures that prohibit undue and coercive pressure on Consumers in collection of repayments/payments or debts due.

6.1 Consumer Data Protection

6.1.1 Introduction

Licensed Financial Institutions are required by the Article 120 of the Decretal Federal Law No. (14) 2018 to protect Consumers’ Data and ensure their confidentiality. This Regulation further requires that Licensed Financial Institutions collect the minimal amount of Consumer Data and information needed in respect of their licensed activities and remain in compliance with all other related laws.

6.1.2 Description

1. 6.1.2.1 Licensed Financial Institutions must establish a function in their organization that is responsible for Data Management and Protection including responsibility for maintaining policies, procedures, systems and controls to protect Consumers’ Personal Data and information against misuse, unauthorized access and undue processing and analysis.
    
2. 6.1.2.2 Licensed Financial Institutions must have policies that specify duration of record keeping and Data retention in accordance with the applicable laws, regulations and business.
    
3. 6.1.2.3 Licensed Financial Institutions must have appropriate security and monitoring measures in place to detect and track unauthorized internal access or use of Consumer information. Any breach of access, misuse or unauthorized release must be recorded including any harm done by such breach for future reporting to and review by the Central Bank.
    
4. 6.1.2.4 Licensed Financial Institutions must notify the Central Bank of all significant breaches of Consumer Data and information and notify any Personal Data breach to Consumers where a breach may pose a risk to the financial and personal security of the Consumer without undue delay. Licensed Financial Institutions are liable for reimbursing any direct costs incurred by the consumer for actual harm done as a result of the breach.
    
5. 6.1.2.5 Licensed Financial Institutions must ensure that Consumers are able to make informed choices with respect to providing expressed consent as to their Data being collected, used and shared with third parties and within the Licensed Financial Institution.
    
6. 6.1.2.6 Licensed Financial Institutions must prevent the misuse of Consumer information and Data.

6.2 Protection of Consumer Assets, Information and Data against Financial Crimes, Misappropriation and Misuse

6.2.1 Introduction

Financial Crimes, misappropriation and misuse of Consumer assets, Data and information significantly undermine Consumers’ trust and confidence in Financial Services. Licensed Financial Institutions must have sound and effective management and business practices for security within the first line of defence.

Licensed Financial Institutions must continually make appropriate efforts and investments to stay on top of these risks and make use of the latest technology and solutions to protect Consumer assets and Data.

6.2.2 Description

1. 6.2.2.1 Without prejudice to other laws and regulations, Licensed Financial Institutions must treat Consumers’ information relationships and business affairs as private and confidential.
    
2. 6.2.2.2 Licensed Financial Institutions must put in place strict internal controls to effectively protect Consumers’ deposits, savings, funds held by stored value facilities and other assets as well as Consumer information and Data, against internal frauds.
    
3. 6.2.2.3 Licensed Financial Institutions must apply sufficient resources to be able to detect both external and internal frauds quickly and ensure they are fully addressed with future prevention measures.
    
4. 6.2.2.4 Licensed Financial Institutions must compensate Consumers in a timely manner for financial losses and expenses resulting from Financial Crimes, misappropriation, cyber-attacks and misuse of assets and information unless it can be proven that the loss was due to the gross negligence or fraudulent behavior of the Consumers.
    
5. 6.2.2.5 Licensed Financial Institutions must ensure their security and protection systems are updated and have the capacity to develop and adopt new approaches to cyber security as required.
    
6. 6.2.2.6 Licensed Financial Institutions must demonstrate they have carried out sufficient Consumer awareness activities related to educating Consumers of the need to protect themselves from Financial Crime.

7.1 Responsible Financing

7.1.1 Introduction

Financing must be provided in a responsible manner to protect Consumers, prevent over-indebtedness and support economic stability. Licensed Financial Institutions must fully apply this Regulation to each and all parts of the Licensed Financial Institutions’ Credit granting process and ongoing management.

7.1.2 Description

1. 7.1.2.1 Licensed Financial Institutions must ensure they have obtained credible and independent information regarding the financial situation of the Consumer requesting financing.
    
2. 7.1.2.2 Licensed Financial Institutions must assess the related financial obligations, dependencies, capabilities and needs of their Consumers before agreeing to provide them with a financing product, Advice or service.
    
3. 7.1.2.3 Licensed Financial Institutions must ensure at the time of granting of Credit, the Credit does not cause over-indebtedness and/or undue financial burden on the Consumer.
    
4. 7.1.2.4 Licensed Financial Institutions must not charge unreasonable fees.
    
5. 7.1.2.5 Licensed Financial Institutions must not provide excessive Credit beyond amounts of Credit that the Consumer requires and / or that is reasonable, affordable and suitable for the Consumer’s needs.
    
6. 7.1.2.6 Licensed Financial Institutions must apply proper criteria in the method for carrying out due diligence and stress testing for the affordability and suitability of a Credit product for the Borrower / Financee. A copy of the testing results must be provided to the Consumer in writing for free.
    
7. 7.1.2.7 Licensed Financial Institutions must not grant or extend any form of Credit without expressed and documented consent by the Consumer.
    
8. 7.1.2.8 Licensed Financial Institutions must adopt a remuneration program for the staff that does not incentivize aggressive and inappropriate levels of Credit granting.
    
9. 7.1.2.9 Licensed Financial Institutions must monitor for inappropriate activities by Credit granting and sales representatives. The monitoring, at minimum, includes monitoring of monthly trend analysis of Credit granted and relevant Consumer Complaints.
    
10. 7.1.2.10 Licensed Financial Institutions must investigate and, where required, take corrective actions on anomalies and inappropriate activities in Credit granting. Such actions must be documented for review by Central Bank.
     
11. 7.1.2.11 Licensed Financial Institutions must ensure that Consumer Credit information provided to external bodies, including the Credit Information Agency is accurate and filed in a timely manner. Where a Licensed Financial Institution is made aware of any Errors in the Consumer information, the Licensed Financial Institution must take corrective measures in a timely manner.

8.1 Complaint Management and Complaint Resolution

8.1.1 Introduction

Licensed Financial Institutions must be transparent with Consumers and operate in a fair, honest and competitive manner. Licensed Financial Institutions must have in place a fair, accessible and transparent process provided without charge for addressing Complaints with Consumers and that are resolved in a timely manner.

8.1.2 Description

1. 8.1.2.1 A Licensed Financial Institution must establish an independent Complaint management function in the organisation that directly reports to the Senior Management. The function must be empowered to effectively resolve Complaints and independent of other business operations.
    
2. 8.1.2.2 Licensed Financial Institutions must have an efficient and effective Complaint management system with supporting policies and procedures. The system must enable Consumers to make Complaints easily and free of cost.
    
3. 8.1.2.3 Licensed Financial Institutions must ensure Consumers are aware of their rights and responsibilities when seeking to resolve their problems or Complaints.
    
4. 8.1.2.4 Licensed Financial Institution is responsible for accepting and addressing all Complaints involving the activities of Authorized Agents as well as any product and/or service sold, marketed or advertised by the agent on behalf of the Licensed Financial Institution.
    
5. 8.1.2.5 Licensed Financial Institutions must ensure compliance with all time frames prescribed by the Central Bank including turnaround time for acknowledgments and provided written responses to Complaints that must provide the Consumer an explanation in writing of any delay or any inability of having a resolution to the Complaint or Error.
    
6. 8.1.2.6 Licensed Financial Institutions must ensure their Authorized Agents provide a credible and unbiased process for Complaint resolution in accordance with this Regulation and Standards and the Licensed Financial Institution’s policy and procedures.
    
7. 8.1.2.7 Licensed Financial Institutions must train their staff and Authorized Agents in identification and handling of Complaints.
    
8. 8.1.2.8 Consumers must be informed of the Licensed Financial Institution’s process for the management of Complaints as well as recourse to a Complaint resolution mechanism to ensure fairness, transparency and neutrality in resolving Complaints.
    
9. 8.1.2.9 The Central Bank will supervise the effectiveness and efficiency of the financial Complaint resolution mechanism.

8.2 Complaint and Inquiries Management Data

8.2.1 Introduction

Data collected on Complaints and inquires is a critical source for analysis that can improve a Licensed Financial Institution’s overall conduct as well as problems with its product offering. Prompt analysis of trends help to identify deficiencies in Licensed Financial Institutions’ sales practice, business conduct, and product design and system defects. Therefore, it is critical for a Licensed Financial Institution to establish standards for Complaint and inquiry Data to be gathered, collected, classified, stored, analysed and reported.

8.2.2 Description

1. 8.2.2.1 Licensed Financial Institutions must utilise the Data collected to conduct analysis and assess key risks and trends arising out of the Data. The results of the analysis must be used by the Licensed Financial Institution for conducting investigations into thematic trends, conducting root cause analysis of repeat issues and for designing new controls to address issues and improving quality and efficiency of various aspects of Consumer service. The Licensed Financial Institution must document any actions taken for review by the Central Bank.
    
2. 8.2.2.2 The Complaints Data must be provided on a quarterly basis to the Senior Management of the Licensed Financial Institution to enable managerial level monitoring of trends and supportive decision-making.
    
3. 8.2.2.3 Licensed Financial Institutions must ensure that the Data collected and reported to the Senior Management and to the regulator as required, is accurate, timely and complies with the Licensed Financial Institution’s data governance policies and procedures.

9.1 Consumer Education and Awareness

9.1.1 Introduction

Article 121/2 of the Decretal Law states: “The Central Bank and Licensed Financial Institutions shall work together to raise public awareness of the types of banking services and financial products and their inherent risk through all means of communications and media, in accordance with the rules set by the Central Bank in this regard.”

Financial education and awareness must play an important role in the Consumer protection framework. Financial education can help to reduce the risk exposure of Consumers by enabling them to make financial decisions that are in their best interests. The collaboration between the Central Bank and Licensed Financial Institutions to expand efforts to increase awareness will help to mitigate risks to Consumer and aid Consumers in making informed financial decisions.

9.1.2 Description

1. 9.1.2.1 Licensed Financial Institutions have responsibility in improving Consumers’ financial education and awareness. Licensed Financial Institutions must undertake on-going initiatives to increase awareness, mitigate Consumer risks and aid Consumers in making informed financial decisions.
    
2. 9.1.2.2 Where products and/or services are offered online or in any other digital form, Licensed Financial Institutions must still comply with the provisions of the Regulation and accompanying Standards by providing Consumers with unbiased educational information and ensure Consumer awareness of any risks before acceptance of the product or services is completed.
    
3. 9.1.2.3 Licensed Financial Institutions must collaborate with the Central Bank and may assist jointly with other stakeholders to promote financial education and awareness.
    
4. 9.1.2.4 Licensed Financial Institutions must assist Consumers to develop knowledge, skills and confidence to sufficiently understand risks, make informed choices, know where to go for Advice / assistance, and to take positive action to improve their own financial wellbeing.

10.1 Inclusion

10.1.1 Introduction

Article 123 of the Decretal Law states: “The Board of Directors shall establish necessary regulations and mechanisms to ensure that every natural Person shall have the right to access all or part of the banking and financial services and products from Licensed Financial Institutions suited to his/her need.”

To be able to fully participate in society and the financial Market, access must be inclusive. Consumers including vulnerable groups and People of Determination must have access to Financial Products and/or Services, e.g. a bank account, credit and the ability to carry out financial transactions in a safe and efficient manner.

10.1.2 Description

1. 10.1.2.1 Licensed Financial Institutions must consider the requirements of vulnerable groups and People of Determination in its product and service design.
    
2. 10.1.2.2 Licensed Financial Institutions must provide the option of basic and low-cost financial products and/or services to Consumers.
    
3. 10.1.2.3 The staff of Licensed Financial Institutions must be regularly trained to identify and, where possible, assist vulnerable persons and People of Determination.
    
4. 10.1.2.4 Licensed Financial Institutions must consider a vulnerable person’s or person of Determination’s special financial situation when offering products or services and the cost of any payable fees and instalments.
    
5. 10.1.2.5 Licensed Financial Institutions must ensure that they provide physical locations of their ATMs and branches where there is appropriate access and conveniences for use by People of Determination.
    
6. 10.1.2.6 Licensed Financial Institutions must be able to demonstrate their compliance with Federal Law No. 29 of 2006, in respect of the rights of People of Determination with Special Needs.
    

10.2 Gender and Racial Equality

10.2.1 Introduction

Minority Groups have differing financial needs. Licensed Financial Institutions have a responsibility of ensuring there is appropriate access to their products and/or services for Minority Groups.

10.2.2 Description

1. 10.2.2.1 Licensed Financial Institutions must establish anti-discrimination code of conduct.
    
2. 10.2.2.2 Licensed Financial Institutions should collect, analyse and track Consumer supply and demand Data disaggregated by gender, age and ethnicity to measure access to and usage of Financial Products and/or Services. The research outcome must be used solely for improving equality of the Financial Services provided to minority groups and females.
    
3. 10.2.2.3 Licensed Financial Institutions should consider the particular needs of minority groups in their financial education and awareness programs.
    
4. 10.2.2.4 Licensed Financial Institutions must not make decisions on the sale of product or services including Credit and/or setting of interest/profit rates that discriminate on the grounds of family status, gender of being a member of a Minority Group.

11.1 Shari’ah Compliance for Financial Services

11.1.1 Introduction

Given the critical significance of Shari’ah compliance in the Islamic finance business, Islamic Institutions the State must strive for the best international standards by incorporating Shari’ah principles in all aspects of their business comprised of operational, reporting, business conduct, risk management and oversight functions.

11.1.2 Description

1. 11.1.2.1 Islamic Financial Institutions must uphold Shari’ah principles and must be compliant with the Islamic Financial Institution’s Internal Shari’ah Supervision Committees (ISSC).
    
2. 11.1.2.2 Board and Senior Management of the Islamic Financial Institutions must monitor the activities and integrate Shari’ah compliance into the Islamic Financial Institution’s culture, processes, operation, and code of conduct.

This Regulation and the accompanying Standards are in addition to any requirement of any other regulatory authority as applicable to Licensed Financial Institutions. In case of any conflict with such requirement, the provisions of this Regulation and accompanying Standards will prevail.

If there is conflict between the provisions of this Regulation and/or its accompanying Standards with any provisions in the previous regulations, notices, standards, circulars or instructions issued by the Central Bank, the provisions of this Regulation and the accompanying Standards shall prevail.

Violation of any provision of this Regulation and the accompanying Standards may be subject to supervisory action, sanctions and penalties as deemed appropriate by the Central Bank.

Without prejudice to the provisions of the Decretal Law, supervisory action and sanctions by the Central Bank may include fines, replacing or restricting the powers of Senior Management or Members of the Board.

The Regulatory Development Division of the Central Bank shall be the reference for interpretation of the provisions of this Regulation.

This Regulation and the accompanying Standards shall be published in the Official Gazette and shall be considered effective one month from the date of publication. This Regulation shall apply to all Licensed Financial Institutions, and they have to adjust their provisions in accordance with the Articles of this Regulation during a period not exceeding one year of its publication date.