Local newspaper, The National, said the industry is to move to a “twin peaks” model, loosely based on the Australian system of financial regulation. Under the new regime, a large swathe of regulatory responsibility will move from the Central Bank to the Emirates Securities and Commodities Authority, which will be renamed the Financial Services Authority.
The FSA, which will be based in Abu Dhabi, will regulate the investment banks, insurers and other financial institutions and will have oversight of conduct of business, consumer protection and “the daily business of running the financial system”, said The National.
Meanwhile, the Central Bank will continue to have oversight of capital markets, monetary policy and taking a “bird’s eye view” of the industry. It will also continue to regulate the commercial banks for at least the next four years.
Mazen Boustany, head of banking and finance at Habib Al Mulla, the law firm advising the Ministry of Finance as sponsor of the law is quoted by The National as saying: “The Government has decided to move to a twin peaks regulation model. It will mean you have two regulators for the financial sector – a prudential regulator and a conduct-of-business regulator.”
Arwa Hamdieh, co-founder of the recently launched Financial Services Association UAE, said the association welcomed the move.
"The UAE will benefit from aligning its regulatory model to international best practice, which will as a result make the market more attractive to international firms wishing to establish presence in the UAE, it will also give more confidence to existing firms to expand when market conditions allow, and provide added protection to investors and consumers. We look forward to supporting the UAE’s financial services industry during the transition to the new regulatory framework."
