The IA said, in a letter to all the insurance companies in the UAE and dated 18 June 2018, that it had decided to stop Holborn Assets from working as an intermediary for three months, or until it changes its performance, after it was found to have violated rules introduced in 2013 concerning the insurance brokerage system and its amendments.
The regulator’s letter informed companies providing intermediary insurance products about its decision. This would involve all IA-regulated life companies, who have been ordered not to deal with Holborn Assets Insurance Brokers “until further decisions are made” by the IA.
At the time of publishing this story, a spokesperson for Holborn Assets was unable to comment.
Offshore bonds
According to people International Adviser has spoken to in Dubai, the case is believed to centre around the sale of a long-term savings plan, or offshore bond, provided by a non-IA regulated life company to a UAE resident.
This is an issue known to have been a cause for concern among the IA-regulated life companies in the UAE for some time.
Under the current rules, IA-regulated insurance brokers can only sell products provided by IA-licenced life companies to UAE residents.
However, it has long been the case that other savings and investment plans from non-IA licenced companies have been marketed and sold in the Emirates under a variety of conditions and these products have been around for a long time.
Closer supervision
The latest move by the IA comes not long after it signed a cooperation deal with the other main regulator of the financial markets in the UAE, the Securities and Commodities Authority (SCA), to work more closely on supervising the insurance market, among other sectors.
The IA and SCA agreed to cooperate in matters related to licensing and supervising insurance companies. They also agreed to exchange regulatory and supervisory information—including the draft regulations and resolutions that either party intends to issue—that may impact the regulatory and supervisory requirements of companies and entities falling under the supervision of either party.
As the IA signals a more aggressive approach on its existing rules with its move against Holborn Assets, the financial adviser sector in the UAE is still awaiting a new set of IA regulations covering commission caps, greater transparency in customer contracts and tighter regulation on the qualifications and behaviour of advisers.
Update:
The suspension on Holborn Assets Insurance Brokers was lifted on 9 July 2018 – to read the full story, click here.
