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4.12.6. Consumer Protection Architecture

Consumer Protection and Financial Literacy

There are no dedicated laws/regulations to protect consumers of the financial sector in

particular. The available consumer protection laws are very general and are mainly for the

retail sector (not for the financial sector). There is no dedicated institutional

mechanism/arrangement where consumers can address unfair treatment. However, those who

are treated unfairly may resort to the Central Bank or any respective regulator that is

governing the sector under which the unfair treatment has occurred. There is no dedicated

Ombudsman office that deals with customer complaints related to Islamic finance; IFIs will

have the same arrangement available for the conventional FIs – i.e. complaints are referred to

the respective regulator of the subject sector.

The confidentiality of customer information by

banks is not specifically provided for under the Banking Law, but the principle is recognized as

a customary banking practice, and, implicitly, under certain regulations issued by the UAE

Central bank. However, the Central bank has wide powers to obtain information (Khan and

Walker, 2010).

IFSB standards on Governance and Conduct of Business Standards are currently not used by

regulators. Prospectus disclosure on risk factors is more or less what is available in regards to

the present guidelines that are meant to protect sukuk investors from risks faced (risk

exposure to assets/obligor, liquidity risks, etc.). There are no specific schemes for financial

literacy in the UAE in general. As such, there no specific Islamic financial literacy schemes for

consumers.

Deposit Insurance

While there is no formal deposit insurance scheme, the Central bank has guaranteed deposits

with UAE banks and UAE branches of foreign banks since 2009 (Khan and Walker, 2010, 588).

PSIA and conventional deposits are treated in the same manner under this scheme.

4.12.7. Human Capital & Knowledge Development Framework

While there is the feeling that adequate personnel in the country to cater to the needs of the

Islamic financial sector at different levels (such as regulatory bodies, IFIs, law firms, etc.) is

lacking, the educational institutions and other public bodies supported by government that are

contributing to enhancing the knowledge and skills for the Islamic financial sector are very

limited. There are some universities and institutes such as Hamdan Bin Mohammed Smart

University, Zayed University and Sharjah Islamic Center that are currently offering dedicated

courses/certifications in Islamic banking and finance. The initiatives in the private sector to

enhance the knowledge and skills for the Islamic financial sector are also limited. Ethica

Institute for Islamic Finance is a fully-fledged institute that is dedicated to enhancing the

knowledge and skills for the Islamic financial sector. Furthermore, on-job training conducted is

conducted in the IFIs internally or through Sharia consultancy firms such as Dar Al Sharia,

Minhaj Advisory and Al Ma’aali Consultancy.

The source of information is from interviews.