The United Arab Emirates government has confirmed that the Insurance Authority (IA) and the Securities and Commodities Authority (SCA) will merge after months of speculation.
The announcement comes after the UAE Ministry of Justice established a 10-member committee; which consisted of members of the SCA, the IA, and other bodies including the Ministry of Finance, to examine the implications of the proposed merger.
On 5 July 2020, Sheikh Mohammed bin Rashid Al Maktoum, the UAE prime minister and ruler of Dubai, confirmed on social networking platform Twitter that the IA and SCA will join forces under the watchful eye of the Minister of Economy.
Neither regulator has issued a statement on the decision and there are no further details on the plans.
The merger was made alongside a host of changes to the government structure.
Address ambiguities
Tom Bicknell, partner at law firm Pinsent Masons, said to International Adviser: “At this stage it is hard to say whether the merger of the IA and SCA will result in a corresponding merger of their respective regulatory frameworks.
“Either way, one would hope that the current gaps and ambiguities that exist between the respective regimes are addressed so as to provide more certainty for market participants and consumers of investment and insurance products.”
Mark Sanderson, chief operating officer at Praemium, said: “This has been on the cards for a long time and something the industry has needed.
“It is a very positive move towards a more cohesive regulatory landscape in the UAE and will provide much needed clarity for advisory firms, service providers and investors alike.”
Interesting future
International Adviser published a story in February 2020 about how the then-rumoured merger was expected to affect the financial advice sector.
But have thoughts about the proposal changed since the pandemic?
Sanderson added: “It will be interesting to see how the new regulator actually regulates in practice and deals with those operating beyond their current licence permissions or even without a regulatory licence at all.
“Along with the introduction of adviser remuneration reform and new qualification standards, this will go a long way in building consumer confidence.
“My only hope is that the merger doesn’t delay the introduction of these other critical initiatives and to that end it would be good to see some kind of published commitment as to when the changes are timetabled to happen.
“Lastly, there will be an increased need for the role of the Dubai International Financial Centre (DIFC) and the Dubai Financial Services Authority (DFSA)’s authority in the new regulatory landscape, namely ‘cross-border’ into the UAE and beyond.”
Level the playing field
Darren Jones, head of global technical development at Devere Group, said: “The decision of UAE leaders to increase digitalisation, increase efficiency and cut costs by converting half of all service centres to digital platforms is a timely and proactive move, and is typical of the bold and forward-thinking way the government operates in the region.
“The merging of the IA and SCA will consolidate the important work of the regulators, level the playing field for all regulated firms and further ensure client outcomes are positive and protections robust.
“The change will allow us to integrate our own separately regulated brands, remove duplication of effort and focus on our goal of providing the best and most cost-effective financial advice to our clients.”
