IslamicFinance.de

Central Bank issued a notificaiton in May this year about mis-selling of investments. The UAE‘s largest Sharia-compliant lender, Abu Dhabi Islamic Bank, has welcomed efforts by the central bank to clamp down on unscrupulous sales of investment plans to UAE expats It said, the reputation of the industry as a whole had been damaged by dishonest brokers.
“More regulation is a good thing and we work very closely with the central bank” and other wealth management institutions who wish to improve their services, said Daffer Luqman of Abu Dhabi Islamic Bank. “At the end of the day the reputation of the business affects everybody. If an institution does a bad job of promoting or marketing a service it affects the whole industry so it’s very important that this business is regulated, that it’s regulated effectively and that everybody plays by the rules.”

The Central Bank of the UAE issued the circular advising banks and finance companies to resolve all outstanding mis-selling complaints amicably within a deadline of 90 days. The circular came in a response to an increasing number of complaints in relation to the savings and investment insurance/takaful products. The complaints all have a common theme, from customers that were sold policies that are “complex in nature and are not well understood”. Lugman stated “I think the failure has been in not explaining to the customer well enough the structure of these products and how they operate. But if we have regulation, more effective regulation, it will be good for the future of the industry. This is also why we’ve been very good to ensure we have regular education awareness for our clients to continually remind them of the structure of these products, how they operate and how they fit in their portfolio.”