New Federal Decree-Law Strengthens Central Bank Oversight

A new federal decree-law has been issued regulating the powers of the Central Bank and the activities of financial institutions and insurance companies across the UAE. The law enhances the CBUAE (Central Bank of the UAE) supervisory authority, giving it greater responsibility in maintaining market stability, consumer protection, and prudent financial management.

Enhanced Supervisory Powers

Under the new framework, the Central Bank can impose and recover financial penalties directly from violating parties. Fines may reach up to ten times the value of the violation or any unjust enrichment gained. These fines can be automatically debited from the violator’s accounts held with the Central Bank or any licensed financial institution.

The Central Bank may also reach settlements before a final judicial decision is issued and publish the outcomes on its official website. This measure aims to improve transparency, accountability, and market discipline across the financial sector.

Resolution Authority and Financial Intervention

The Central Bank now functions as a Resolution Authority with the power to intervene when licensed financial institutions face operational or financial distress. It can remove or appoint management, assign guardians to oversee institutions and assets, terminate contracts, restructure capital, or transfer and sell assets when necessary. These powers allow the Central Bank to manage or liquidate institutions in an organised manner, ensuring continuity of essential services and protection of the wider financial system.

Consumer Protection and Dispute Resolution

The decree-law also strengthens consumer protection by consolidating all banking and insurance complaints and dispute resolution processes under Sanadak, an independent entity. Specialised judicial committees will adjudicate financial disputes, with their decisions being final and enforceable for claims up to AED 100,000.

Licensed institutions are also required to provide accessible financial services to the community, supporting the UAE’s digital transformation and innovation efforts within the financial sector.

Maintaining Financial Stability

The law introduces proactive measures for early intervention when signs of financial deterioration appear in licensed institutions. It also reinforces the Central Bank’s mandate to maintain the stability of the national currency, manage foreign reserves prudently, and safeguard the overall integrity of the UAE’s financial system.

Financial institutions are required to maintain adequate guarantees for all types of facilities offered to natural persons and sole proprietorship clients, further strengthening the country’s financial safety net.