The change to the ‘Financial Consultation and Financial Analysis’ licence follows a consultation with the industry last year, and is one of a series of amendments, which also include a code of conduct for employees, made to the regulations earlier this year.
The new definition of financial planning defines the activity as “conducting comprehensive assessment of the current and future financial position of a person through the use of variables known in the present time in order to forecast the future cash flows to help the customer develop a detailed strategy or a financial plan associated with investment in securities, commodities or commodities contracts to achieve the customer’s financial goals”.
Much needed clarity
According to financial advisers International Adviser spoke to in Dubai, the addition of the amendment defining the activities of financial planning makes clear that the SCA is the regulator of wealth management and financial planning in the UAE.
“The SCA has provided some much needed clarity to the regulatory framework in the UAE by extending the ‘Financial Consultation and Financial Analysis’ licence to include financial planning, thus drawing a very distinct line between the distribution of insurance products under an Insurance Authority licence, and wealth management and financial planning more generally to be provided by firms regulated by the SCA,” said Matt Brittain, director and portfolio manager at Aria Capital Management.
"Companies must also take steps to ensure clients realise the nature of the risks associated with the implementation of any financial plan."
UK-headquartered Aria, which offers a wealth management platform, funds management, stockbroking and discretionary portfolio management, announced last week that it has gained an SCA licence for its Dubai office.
Definition significant
Another SCA-licenced financial adviser in Dubai said: “The fact they have defined (financial planning) is important in UAE law.
“Anytime there are disputes, the issue of what you do is important, so quite clearly the fact it is defined tells you what it is you’re doing, so therefore it’s got to be significant,” he said.
In a press release put out in Arabic, which IA translated, the authority said the amendment aims to give a broader scope and comprehensiveness to the main activity of the financial consultation and financial analysis firms it has licenced.
A further amendment to the text of the regulations also “allows for companies operating in the field of securities to obtain a licence to practice the business of financial consultation and financial analysis in the country in addition to other activities”.
Code of conduct
Other amendments to the rules compel SCA licenced financial advisers to develop and activate “standards of professional conduct of employees in accordance with international practice”.
Companies must also take steps to ensure clients realise the nature of the risks associated with the implementation of any financial plan or financial analysis provided.
A further amendment requires licenced advice firms to provide an annual financial report within 90 days of the end of the fiscal year signed by the board of directors.
