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4-Traders Homepage  >  Equities  >  BAHRAIN STOCK EXCHANGE  >  Takaful International Company BSC    TAKA   BH0004668917

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Takaful International BSC : UAE Central Bank stops sale of savings/investment and Takaful/Insurance products

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05/19/2017 | 10:41am CEST

The circular states that the UAE Central Bank has received an increasing number of complaints in relation to savings/investment and insurance/Takaful products.

The Central Bank observed a common theme with complaints of mis-selling of these products, which are complex in nature and are not well understood. We observed that staff who are marketing the products at the counter are neither well trained to understand the risk profile of the customer, nor have the ability to explain such products to customers, according to the Central Bank circular.

The Central Bank further stated that the responses provided to the Consumer Protection Department of the Central Bank by banks and financial institutions were unsatisfactory. Leading to the sale ban.

As a result of the complaints, the UAE Central Bank will be implementing a policy on Bancassurance, and is currently working on defining the governance structure. The new policy will include clauses for customer profiling and suitability of products, transparency, grievance redressal mechanisms and non-compliance charges for violating guidelines.

However, banks and financial institutions with specific approvals to market term life insurance and general insurance may continue to do so, according to the statement, but only if the employee selling these products has the requisite qualifications and they must use a system to assess the suitability of the products for the customer.

All banks and financial institutions are advised by the UAE Central Bank to amicably resolve all outstanding complaints related to savings/investments or insurance/Takaful with their customers within 90 days from the date of the circular (11 May 2017).

The recent circular from the UAE Central Bank dealing with what they say is `the common theme of mis-selling` of Bancassurance products makes for fascinating reading. The UAE `onshore` regulatory environment has been shifting significantly over the last 12 months, and this is a demonstration that a further realignment is needed to protect the underlying consumer, Nigel Sillitoe, CEO, Insight Discovery, a leading market intelligence business, told CPI Financial. Whilst Im not too surprised by some of the statements in this circular it does further demonstrate that there is a drive for better consumer protection and higher standards for advisors operating within onshore financial services market. The circular appears to suggest that all banks need to rectify all the outstanding client complaints amicably within ninety days. This could see an interesting outcome for the banks and the insurance companies, as the UAE central bank in the past has generally taken the positon of return the client to the monetary position he was in before he or she was mis-sold. I think with all the other regulatory changes with the IA and ESCA, changes on commission structure, and full disclosure coming in from the Isle of Man based insurance groups in 2018, it will be an interesting few years for financial services companies operating onshore in the UAE.

(c) 2009 - 2017 PANAPRESS. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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Younis J. Al-Sayed Chief Executive Officer
Jamal Ali Al-Hazeem Chairman
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Khalid Saud Abdulaziz Al-Hasan Director
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