While the new regulations from the Emirates Securities & Commodities Authority (SCA) are far reaching, it is anticipated that they are likely to have a significant impact on the way in which businesses operate and importantly how funds are distributed.
There is also a concern that the regulations could hinder growth and make it cost prohibitive for some firms to operate in the UAE in the future.
The UAE currently has four bodies that oversee financial services distribution. This approach has led to an absence of any clear and coherent unified legislation and regulation, which ultimately means that the door has been, and continues to be, wide open for some companies to take on more risk, break the rules and ultimately put client’s wealth at risk.
I welcome the fact that SCA has announced rule changes as it is a step in the right direction to tighter regulation, and hopefully it will stamp out the significant number of people that fly in to tout the next best fund and fly out again. This needs to be clamped down on and by doing so, hopefully investor confidence can be improved.
At the same time, I doubt as to whether the rule changes are sufficient to clean up the financial services practices in the UAE. However, until there is a more cohesive approach to financial services regulation, the system will continue to be abused by the unscrupulous advisers operating here.
Swakelin
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Sarah Lord is wealth planning director, Killik & Co, Middle East & Asia and a member of the International Adviser intermediary panel.
