UAE publishes code to end 'shocking' fees

Regulators in the United Arab Emirates have published a new code of conduct aimed at improving standards among financial services providers. This comes amid widespread concerns that expatriate investors in Dubai and the UAE are being ripped off by financial advisers.

The new code published by the Emirates Securities and Commodities Authority calls on financial services providers to uphold the highest professional and moral standards and to protect the interests of their clients at all times.

Many have been highly critical of the fees payable on international bonds by investors in the UAE. These can include initial charges of up to 8 per cent, annual "establishment" charges of 1.5 per cent for the first five to 10 years, and opaque annual "investment" charges of up to 3 per cent.

Sam Instone, chief executive of AES International, a wealth manager based in the UAE, welcomed the code, which is based in part on the UK regulator's Treating Customers Fairly initiative first published in 2006.

"It is clearly very good to have a firmer regulatory grasp on the market," said Mr Instone, who called some of the fees being charged by certain advisers "shocking".

An international fund manager working in the UAE said many financial advisers operating in the region were self-employed and reliant on commission payments for income.

"Fees and charges are generally not spoken about," he said, adding that some financial advisers were guilty of providing inappropriate advice or advice at a very high cost.

Concern exists as to whether there would be appropriate monitoring and enforcement of the code.

Progress in introducing new and lower-cost funds has been slowed by earlier rule changes that require funds to be registered by the party selling them (not the asset manager). Banks in the UAE are the biggest fund vendors.

"The banks are not happy about paying [for fund registrations] and nor are asset managers," said Mr Instone.

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