General Requirements

1. 2.1.4.1Licensed Financial Institutions that offer structured investment products must comply with the requirements in Section 2.1.1 of this Article as applicable, in addition to complying with the requirements of this Section.

Prior to Providing a Structured product

1. 2.1.4.2Licensed Financial Institutions must disclose to the Consumers the details of the bank or entity issuing the structured product including the name and contact information of the entity.
2. 2.1.4.3Licensed Financial Institutions must disclose to the Consumers the responsibilities of the Consumer’s Licensed Financial Institution and that of the entity issuing the product regarding the sales, performance and management of the structured product.
3. 2.1.4.4Licensed Financial Institutions must disclose the name of the regulatory entity who regulates the product. Where a Licensed Financial Institution intends to use a Third Party to develop a structured product on its behalf for its Consumers, it must disclose this fact and whether the Third Party is regulated within the UAE.

At Point of Entering the Contract

1. 2.1.4.5Licensed Financial Institutions offering any structured product must provide Consumers with disclosure information on the structured product as may be relevant to the Consumer including:
   1. a.Capital security (any guarantee provided on the whole or portion of the principal amount of investment);
   2. b.The level, nature, extent and limitations of any guarantee on the principal and/or returns;
   3. c.The name of the guarantor of any guarantees and the credit worthiness of the guarantor if rated by an accredited credit rating agency;
   4. d.The risk that some or all the investment may be lost;
   5. e.The risk of using leveraging on an investment and an explanation with an example as to the full cumulative effects on losses of initial capital investment, the potential extraordinary losses possible due to leveraging and that it could result in the possible liquidation of the Consumers pledged assets;
   6. f.Any limitations/restrictions on the sale or early redemption of the funds invested;
   7. g.The consequences, including the cost, of exiting the product early;
   8. h.Description of any assumptions or calculations used to determine performance/cost of the investments including detailed, clear examples where the assumptions are met and failed to be met, and the consequences it has on the investment;
   9. i.The risk or likelihood that the estimated or anticipated return on the product will not be achieved;
   10. j.The potential effects of volatility in price and fluctuation in interest/profit rates and/or movements in exchange rates and underlying securities on the value of the investment; and
   11. k.Separate disclosure of each type of fee and amount associated with the management, purchase, sale, set up and administration of the product and investment account.
2. 2.1.4.6Licensed Financial Institutions must provide a copy of its assessment as to the suitability of the product based on the financial and risk profile of Consumer including the following warning statement with all numerical illustrations of investment performance:

During the Term of the Contract

1. 2.1.4.7Licensed Financial Institutions must, at minimum, on a quarterly basis, provide to Consumers a statement on their investment which must include, as applicable:
   1. a.The date of the statement and the period covered by the statement;
   2. b.The initial value of the investment at the time the investment was first made;
   3. c.The opening balance or value at the start of the quarter;
   4. d.Each addition to the account including additional amounts invested and the respective dates of the transaction;
   5. e.Each withdrawal and the respective dates of the transaction;
   6. f.The total actual balance at end of the quarter;
   7. g.The number of units held;
   8. h.Disclosure as to the net interest/profit and loss when comparing the cumulative total amount invested at the start against the market value of the investment shown at the end of this quarterly statement;
   9. i.Separate disclosure of each type of Fee and amount associated with the management, administration, sale, set up and ongoing administration of the structured product and investment account; in addition, a cumulative total of these Fees since the investment was initiated must also be disclosed; and
   10. j.Information on how to file a Complaint with the Licensed Financial Institution which includes, at minimum, the contact details of the Licensed Financial Institution’s Complaint function, channels for disputing a transaction or lodging Complaints (e.g. by email, phone, fax etc.) and response time to address Complaints.

Disclosure Requirements for Shari’ah Compliant Structured products

1. 2.1.4.8IFIs which offer Shari’ah compliant structured products must comply with the requirements in Section 2.1.4 of this Article as applicable, in addition to complying with the below requirements.
2. 2.1.4.9IFIs which offer Shari’ah compliant structured products to Consumers must:
   1. a.Explain in plain language the Shari’ah concepts applicable to the investment accounts including the rights and obligations of Consumers;
   2. b.Disclose to Consumers that any losses arising from the investment (other than losses caused by misconduct, negligence or breach of terms and conditions by the Licensed Financial Institution) must be borne by the Consumers;
   3. c.Disclose that investment account funds are invested and managed in accordance with Shari’ah requirements; and
   4. d.Disclose the minimum amount required to open an investment account. Consumers should also be warned of the consequences of premature termination of the investment account, including forfeiture of profits.
3. 2.1.4.10In the case of a Licensed Financial Institution offering Shari’ah compliant profit-sharing investment account to Consumers, Licensed Financial Institutions must provide:
   1. a.The profit-sharing ratio between the Licensed Financial Institution and Consumer;
   2. b.The profit distribution method;
   3. c.How and when the Licensed Financial Institution will pay profit and repay the principal;
   4. d.How funds may be dealt with upon maturity; and
   5. e.Additional Fees or change in profit rate resulting from a withdrawal in advance of maturity.