Consumer Protection Standards: reasons for rejecting an application or reducing credit, and complaint decisions

Standard 2.1.1.26 of the Consumer Protection Standards of the Central Bank of the UAE requires a Licensed Financial Institution that rejects a Consumer's application for a Financial Product and/or Service to disclose the reason for rejection to the applicant, except where the reason of rejection is related to Financial Crime Compliance risks or as may be prohibited by law.

Standard 7.1.3.6 allows a Licensed Financial Institution to decrease the credit limit on a card or close the card due to business reasons, and requires that the Consumer be provided a notice and the reason for the limit decrease or closure.

Standard 8.1.1.4 requires the Complaint Management function to ensure that a written response is provided to the Consumer on the decision of the Licensed Financial Institution regarding the Complaint, including full and complete reasons for the decision, subject to lawful obligations.

Standard 8.1.2.1 requires a Licensed Financial Institution to inform a Consumer of the right to file a written Complaint through its Complaint management process when the Consumer has verbally expressed dissatisfaction with a Financial Product and/or Service and the matter cannot be resolved by frontline staff to the Consumer's satisfaction.

Standards 8.1.1.1 and 8.1.1.2 require a Licensed Financial Institution to have in place a Consumer Complaint Management function situated in the UAE that is independent of the management of Retail Operations. Standard 8.1.1.4 also requires the Complaint Management function to ensure that the timed performance standards of the Complaint process are monitored and reported quarterly to Senior Management on the adequacy of the actual performance.

The Standards state that all Licensed Financial Institutions must comply with them when the Licensed Financial Institution carries out licensed financial activities. The Standards state that they are mandatory and enforceable in the same manner as the Regulation.

The Consumer Protection Regulation and the accompanying Standards apply to all Licensed Financial Institutions licensed by the Central Bank in relation to their activities specified in Article 65 of Decretal Law 14 of 2018 regarding the Central Bank and the organization of financial institutions and activities, in the provision of Financial Products and/or Services to Consumers that are Natural Persons and Sole Proprietorships.

The Regulation defines Licensed Financial Institutions as banks and other financial institutions licensed in accordance with the provisions of the Decretal Federal Law 14 of 2018 to carry on a Licensed Financial Activity or more, including those which carry on the whole or a part of their business in compliance with the provisions of Islamic Shari'ah.

The Regulation defines a Consumer as a Customer, meaning any Natural Person or Sole Proprietor who obtains or may prospectively obtain Financial Services and/or Products, with or without charge, to satisfy his or her personal need or others' needs. The Regulation and the accompanying Standards are issued pursuant to the powers vested in the Central Bank according to Article 121 of the Decretal Federal Law 14 of 2018.

Article 13 of the Regulation provides that violation of any provision of the Regulation and the accompanying Standards may be subject to supervisory action, sanctions and penalties as deemed appropriate by the Central Bank.

Article 137 of the Central Bank Law provides that, on establishment of a violation by a Licensed Financial Institution of the regulations, decisions, rules, standards or instructions issued by the Central Bank in implementation of the Law, the Central Bank decides at its own discretion to impose one or more sanctions, which include a fine on the violating Licensed Financial Institution not exceeding 200,000,000 Dirhams.

Article 137 of the Central Bank Law also provides for a fine of between one time and ten times the value of the unjust enrichment, and for withdrawal of the license of the violating Licensed Financial Institution and striking off its name from the Register. The rulebook of the Central Bank lists the Consumer Protection Regulation, C 8/2020, as effective from December 25, 2020, with the status In-Force.

Article 15 of the Regulation provides that the Regulation and the accompanying Standards are to be published in the Official Gazette and are considered effective one month from the date of publication. The rulebook of the Central Bank lists the Consumer Protection Standards as N 1158/2021 with the status In-Force.