New comprehensive regulatory framework could offer much needed consistency and clarity.
A joint financial services regulator, which will fundamentally change regulation of the insurance sector in the United Arab Emirates, could be established in 2020.
Regulation of financial services in the UAE is currently the responsibility of two separate bodies: the Securities and Commodities Authority, which oversees banking and investment; and the Insurance Authority, which oversees insurance activities. In late 2019, a ten-member committee was formed by the UAE government to assess the implications of a merger and make recommendations to the Cabinet and prepare the proposed legislation.
It is hoped that any merger will provide a consolidated regime which clearly regulates all financial services products distributed in the UAE. Consistency and clarity in the distribution of financial services products by intermediaries remains a major issue, especially given the differences in the licensing requirements for financial advisors and insurance brokers and the regulation of commissions.
Ultimately, much will depend upon the approach taken by the committee to the legislation to create the new regulator. Ideally, this will result in a comprehensive regulatory framework similar in style to the UK Financial Services and Markets Act or the legislation establishing the Dubai Financial Services Authority in the Dubai International Financial Centre and the and the Financial Services Authority in the Abu Dhabi Global Market. A more piecemeal approach risks continuing uncertainty in this important sector of the UAE economy.
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