The President of the UAE, Sheikh Mohamed bin Zayed Al Nahyan, has enacted Federal Decree Law No (6) of 2025, addressing the Central Bank of the UAE (CBUAE) and the regulation of financial and insurance sectors.
This new legislation is designed to reinforce the independence of the CBUAE, improve the stability and competitiveness of the UAE’s financial industry, and ensure that regulations align with international standards.
Key provisions include the maintenance of currency stability, protection of the financial system, and prudent management of foreign reserves.
According to the law, the central bank’s main responsibilities encompass executing monetary policy, overseeing licensed financial entities in accordance with global standards, issuing necessary regulations, and managing financial market infrastructure.
Additionally, it designates the CBUAE as the “resolution authority,” empowering it to take action when financial institutions encounter difficulties, which may include appointing new management, restructuring, or liquidating entities.
New legislation enhances CBUAE authority and improves consumer safeguards
The law strengthens consumer protection by streamlining the complaint processes for banks and insurance companies through the independent body known as Sanadak. It establishes specialized judicial committees, whose final decisions are binding for disputes involving amounts up to Dhs100,000.
Additionally, the law requires that credit extensions align with the income of customers in order to prevent irresponsible lending practices.
With the introduction of early intervention powers, regulators can mandate recovery plans, set increased capital or liquidity requirements, modify business strategies, or take direct control of struggling institutions.
The legislation also elevates the maximum limits for administrative fines—penalties can be up to ten times the value of the offense or unjust enrichment, automatically deducted from accounts held with the CBUAE or licensed institutions.
There is a provision for reconciliation with offenders before a final judicial ruling, and decisions regarding fines may be published to promote transparency.