Market Conduct Risk: A New Chapter
Why Change is Needed
This article is the first in our Thought Leadership series on market conduct and conduct risk. Our goal is to share insights that help businesses understand the growing challenges of acting ethically and managing conduct risk. Regulations are shifting quickly as new products and larger customer bases reshape the financial industry. Through this series, we hope to guide organizations as they navigate this complex and changing landscape. The Central Bank of the UAE (CBUAE) has set clear requirements, and embedding these standards is key to shaping the future of financial services in the region.
Global Lessons in Market Conduct
Around the world, financial institutions have already made great progress. In many developed markets, market conduct is deeply rooted in the culture of financial services. It influences everything from how products are designed to how customers are treated. For banks, it has become a vital part of long-term success.
In the UAE, market conduct is still a developing concept. A major step forward came in December 2020, when the CBUAE introduced the Customer Protection Regulation and Standards. With this move, the CBUAE expanded its regulatory role and placed stronger emphasis on supervision. Since then, the Central Bank has carried out reviews of conduct risk across several licensed financial institutions. This is an important milestone, but it is only the beginning.
The Value of Managing Conduct Risk
The Value of Managing Conduct Risk
Managing conduct risk is about more than compliance. Done well, it can bring clear advantages. Strong conduct practices build customer trust, strengthen resilience, and lower the cost of correcting mistakes. On the other hand, weak practices can damage a company’s reputation and lead to costly financial consequences.
As regulations evolve and customer expectations rise, financial institutions in the UAE need to rethink how they operate. Effective systems, clear processes, and strong monitoring are now essential to managing risk and meeting both regulatory and customer demands.
