SCA freezes new licences as UAE advisers face client-centric rulebook deadline

Mark Battersby

16th August, 2021

4 min read

Sweeping new Securities and Commodities Authority client-centric rules seen by International Investment will put the 36 existing licenced financial consultancy firms on a one-year deadline to comply, while applications in the pipeline will be made void effectively putting a freeze on licences issued for at least 12 months.

The SCA chairman's key decisions in the new ‘Regulations Manual of the Financial Activities and Status Regularization Mechanisms' are dated 9 May 2021, and the licenced firms must comply "within a period not more than one year from the date, in which this decision came into effect".

It also referred to applications previously submitted to the SCA which were "not completed or will be adjudicated before the date, in which this decision came into effect, shall be void", International Investment can reveal.

"The applicant shall amend its application according to the new provisions and requirements without paying a new application fee, or withdraw its application if he desires to refrain from the same with his right to recover the application fee paid by him", it said.

The manual highlights under its Article 4 general principles section six different areas which the financial consultants must abide by, in language which is very different to previous rules:

1‐ Honesty and integrity: Refrain from participating in any activity that shall conflict with the interests of the company or the clients, that shall affect the work or regularity of the work of the capital market institutions,or that shall represent illegal or unacceptable work according to the professional standards or the companyʹs instructions. Moreover, maintain confidentiality of the information and data related to the clients and professional tasks and practicing the jobs that are allowed to be practiced together after obtaining the Authorityʹs approval and without conflict of interests and tasks.

2‐ Skills, due diligence and care: Practicing the works skillfully and exerting due diligence efforts and due effective care when performing the job.

3‐ Good behavior: The applicable professional behavioral standards in any of the capital market institutions shall be complied with when practicing the job.

4‐ Dealing with the Authority: The dealing with the Authority shall be in an appropriate, transparent and cooperative method such as notifying the Authority immediately of any essential information or significant and necessary data.

5‐ Effective administrative: Exerting due and reasonable efforts to ensure regulation, administration and control of the licensed bodyʹs works in an effective manner when practicing the administration tasks.

6‐ Compliance: Exerting due efforts to comply with the applicable legislations in the state.

The activation of these new rules comes against the backdrop of the planned merger the Insurance Authority (IA) and Central Bank of the UAE, following previous speculation that the SCA would be merging with the IA.

The latter possibility that did not materialise means that advisers need two licences for fully holistic financial planning in the UAE because the IA licence covers the protection products needed to sell to clients and the investment products are covered by the SCA.

The 36 firms listed on the SCA website as having the financial consultancy licence are:

ADCB Securities- Trading and Clearing Member

HSBC Bank Middle East Limited

AL HILAL BANK

EMIRATES INVESTMENT BANK

ABACUS FINANCIAL CONSULTANTS LLC

SHUAA CAPITAL PSC

Allied Investment Partners PJ S C

NATIONAL RESOURCES FOR FINANCIAL CONSULTING L.L.C

Mondial Dubai LLC

Acuma LLC

Dexter Capital Financial Consultancy LLC