The vice president and prime minister of the UAE and ruler of Dubai said the Insurance Authority (IA) has merged with the Central Bank of UAE.
This comes after reports claimes that the IA would be merged with the Securities and Commodities Authority (SCA).
Sheikh Mohammed bin Rashed Al-Maktoum said: “The new economic organisation in the country aims at raising the efficiency of the insurance sector and raising the efficiency and competitiveness of our local financial markets and giving them greater flexibility in their business, and our goal in all of this is to enhance the competitiveness of our national economy.
“Our government will remain flexible, supportive and fast in making appropriate economic decisions.”
The move will transfer all operational and executive powers of the SCA to the local stock markets, while the financial watchdog maintains regulation and oversight of the local financial markets, Sheikh Mohammed said in a tweet.
Reaction
International Adviser contacted industry members to discuss what the merger means for the sector.
Tom Bicknell, partner at law firm Pinsent Masons, said: “The industry has been aware that there was to be a consolidation of one or more of the UAE’s financial regulators for some time.
“However, expectations were that it would be a merger between the IA and the SCA; the announcement that the IA would be subsumed within the Central Bank and the capital markets oversight be removed from SCA’s remit was, frankly, a surprise turn.
“However, the reframing of SCA as the authority responsible for financial services licensing and the Central Bank’s existing prudential oversight of banks being extended to insurers has the potential to be a pretty smart ‘division of labour’.
“We await eagerly the more detailed rules which will help guide the market through these important changes.”
Better consumer outcomes
Sam Instone, director of IA-regulated AES International, said: “This is a very exciting development for the UAE financial services sector.
“Consolidation of the historically complicated regulatory landscape will lead to better consumer outcomes and a stronger and more prosperous economy.
“We expect to see further consolidation of firms in the wake of BOD49, increasing capital requirements and increased compliance and regulatory supervision. This will be fantastic for improving the reputation and trustworthiness of the marketplace.”
Andrew Bates, head of private banking for the Middle East at Nedbank Private Wealth, said: “As a business regulated by Central Bank of the UAE, and that has been working to establish our presence here since 2011, we always welcome and embrace change in the region from a regulatory perspective.
“This is especially the case where it seeks to increase the efficiency and competitiveness of UAE’s local financial markets. We see this a very positive step and look forward to working with Central Bank of the UAE and the insurance authority in implementing any changes.”
