UAE’s new financial ombudsman to oversee consumer complaints

Sanadak aims to resolve customers' banking and insurance complaints and removes the need to take claims to court

Sanadak's services have been rolled out for consumers to report issues within the financial sector. Antonie Robertson / The National

UAE consumers can now lodge complaints against banks and licensed insurance companies through Sanadak, the country’s first ombudsman unit, which aims to resolve customer issues within the financial sector.

Sanadak's services were rolled out on Thursday, reducing the legal burden on consumers by removing the need to take claims to court and judicial authorities.

“The UAE is paving the way for a more coherent financial landscape where complaints are resolved efficiently and transparently, fostering an environment of trust and stability,” Fatma al Jabri, chairwoman of Sanadak, said.

“Sanadak is the first ombudsman that is independent in the Mena region, setting the benchmark for consumer protection and financial preparedness.”

In 2021, the UAE Central Bank began working on the country’s first financial consumer protection framework to ensure the fair treatment and protection of banking and financial services customers.

This was followed by an announcement last year that it had established Sanadak to oversee consumer protection in the country.

Previously, consumers were first required to lodge a complaint with their bank. Consumers could only escalate their complaint with the UAE Central Bank’s Consumer Protection Department if the bank had not responded to a complaint within 30 calendar days, or if they were not satisfied with the outcome.

However, this process has been transferred to Sanadak, where consumers can submit complaints free of charge for any product, service or offering provided by financial institutions and licensed insurance companies.

Insurance companies in the UAE are regulated by the UAE Central Bank after the Insurance Authority was merged with the regulator in 2020.

“Sanadak’s inception is aligned with the UAE leadership’s directive to enhance government services and protect consumers of licensed financial institutions by providing an impartial platform for complaints of solution between consumers and licensed financial institutions,” Ms al Jabri said.

“It signifies the UAE’s commitment to upholding international best practices in the financial consumer protection area, showcasing dedication to becoming a global leader in the financial sector.”

There are numerous issues that UAE consumers face with banks and insurance companies, from being overcharged fees to more serious problems such as financial fraud and the mis-selling of financial products.

After the merger of the Insurance Authority with the UAE Central Bank, new regulations were introduced in 2020 to protect consumers from expensive, inflexible, long-term savings products sold by global insurers, which locked investors in for a set period of time and charged them high amounts if they chose to exit early.

Financial fraud is also on the rise, with 54 per cent of people in the UAE saying they have been scammed at least once, according to Visa’s annual Stay Secure survey released in December.

In the UAE, cyber crime costs $746 million a year and affects more than 166,000 victims, according to research by UK consumer watchdog Comparitech.

Consumers can lodge complaints after registering on Sanadak’s website. They have two options: one for financial services and banks, and the other for licensed insurance companies.

If the complaint is accepted – there are a number of eligibility criteria listed on the website such as misleading, deceptive, fraudulent or unfair conduct by or on behalf of a licensed financial institution or insurer – Sanadak may require parties to provide more information.

Depending on the outcome, consumers can appeal the decision at a cost of Dh500.

Sanadak, which will focus on educating consumers about their rights, is an initiative that will change the landscape of the UAE’s financial sector ecosystem, according to Jamal Saleh, director general of the UAE Banks Federation.

It will also work with financial institutions and insurance companies to ensure they comply with consumer protection standards.

“This unit that we have been working on … will work with full impartiality, efficiency, fairness and transparency to ensure that the resolutions for both are important,” Mr Saleh said on Thursday.

“This will reinforce trust, it will strengthen inclusion and, most importantly, it will elevate our global positioning for the UAE.”