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UAE central bank clamps down on mis selling of expat investments
| Published: | 1 Aug at 6 PM |
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The UAE’s Central Bank is being praised for its recent clampdown on the mis-selling of unsuitable investments to the emirates’ expat community.
The Central Bank began its attack on unscrupulous sales of dodgy investment plans to its expat population by instructing finance companies and banks under its jurisdiction to amicably settle mis-selling complaints within a period not exceeding 90 days. The notice was issued in response to the ever-increasing number of complaints about investment and savings products being offered to expats.
According to the bank, all complaints have a common theme in that customers have been sold complex, badly explained and unsuitable products by IFAs and bank advisors in the region. The policies being pushed are the fixed-term or contractual investment and savings plans offered by global insurance companies mostly operating in offshore tax havens, and are the most expensive and least rewarding financial products available anywhere on the planet. In the main, they are now no longer available to investors and pension savers in first world countries such as the UK.
The central bank’s circular also criticised the use by Emirati banks of untrained or inadequately trained staff as salespersons for the plans. In future, financial institutions permitted to market general and life insurance products must ensure employees have the relevant qualifications and knowledge of the system necessary for assessing the suitability of the products for clients.
Many expats working in the UAE will consider the central bank’s action as necessary and timely, although those who’ve already been sucked into these so-called investments may well wish it had come sooner. The products affected have been mis-sold to unwary expats by unprincipled, often illegally working IFAs across Europe and Asia for years, earning the salesmen involved huge upfront commissions. The UAE Central Bank’s action should close the door on the availability of these poisonous plans, to the benefit of expat investors and pension savers.
The Central Bank began its attack on unscrupulous sales of dodgy investment plans to its expat population by instructing finance companies and banks under its jurisdiction to amicably settle mis-selling complaints within a period not exceeding 90 days. The notice was issued in response to the ever-increasing number of complaints about investment and savings products being offered to expats.
According to the bank, all complaints have a common theme in that customers have been sold complex, badly explained and unsuitable products by IFAs and bank advisors in the region. The policies being pushed are the fixed-term or contractual investment and savings plans offered by global insurance companies mostly operating in offshore tax havens, and are the most expensive and least rewarding financial products available anywhere on the planet. In the main, they are now no longer available to investors and pension savers in first world countries such as the UK.
The central bank’s circular also criticised the use by Emirati banks of untrained or inadequately trained staff as salespersons for the plans. In future, financial institutions permitted to market general and life insurance products must ensure employees have the relevant qualifications and knowledge of the system necessary for assessing the suitability of the products for clients.
Many expats working in the UAE will consider the central bank’s action as necessary and timely, although those who’ve already been sucked into these so-called investments may well wish it had come sooner. The products affected have been mis-sold to unwary expats by unprincipled, often illegally working IFAs across Europe and Asia for years, earning the salesmen involved huge upfront commissions. The UAE Central Bank’s action should close the door on the availability of these poisonous plans, to the benefit of expat investors and pension savers.
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