Your rights as a borrower in the UAE: CBUAE consumer protection explained

The Central Bank of the UAE (CBUAE) Consumer Protection Regulation, in force since 25 December 2020, and its mandatory Standards give anyone borrowing from a licensed bank or finance company specific rights: a Key Facts Statement and the APR before signing, 5 complete business days to change your mind, approved and capped fees, fair debt collection and a complaints route ending with Sanadak, the free ombudsman.

Key takeaways

• The Consumer Protection Regulation took effect on 25 December 2020 and, with its mandatory Standards, applies to every institution the Central Bank licenses.
• You must get a Key Facts Statement before you sign, and the lender must disclose the APR, which includes fees as well as interest or profit.
• You have 5 complete business days after signing a credit contract to withdraw without undue cost, unless you waive the right in writing.
• Fees outside the Central Bank's table need its approval, fee changes need two months' notice, and interest on interest is not allowed.
• A lender must acknowledge a written complaint within 2 complete business days and give its final answer within 30; Sanadak, the ombudsman, is the free next step.

For the complaints process step by step and related topics, see our Borrower rights guides.

Where the rules come from

Three Central Bank instruments do most of the work: the Consumer Protection Regulation sets the principles, the Consumer Protection Standards turn them into detailed requirements, and the older Regulation 29/2011 on bank loans to individuals sets the debt burden limit and the fee table.

Consumer Protection Regulation in force

Since 25 Dec 2020

The Central Bank's Consumer Protection Regulation took effect on 25 December 2020 and is backed by mandatory Consumer Protection Standards for all licensed financial institutions.

The Regulation and the Standards apply to every financial institution the Central Bank licenses, in its dealings with consumers who are individuals or sole proprietors. Islamic banks are covered too; for them, the rules are read together with the Shari’ah compliance regulations. Where another regulator’s requirement conflicts with them, the Central Bank’s consumer protection rules prevail.

These are not voluntary codes: breaking the Regulation or the Standards can lead to Central Bank sanctions, including fines.

Before you sign

Before you commit, the lender must give you a Key Facts Statement and the APR, treat insurance as a separate product and tell you about your cooling-off right. It cannot add a card or a higher card limit without your express consent.

The Key Facts Statement

A Key Facts Statement is a short, stand-alone summary of a product’s rates, fees, key terms and risks. The lender must give it to you before providing the product, as the first document in the sales process, and you sign to confirm you received it before you sign the contract (Consumer Protection Standards, Article 2).

For a loan, the statement must show the expected annual interest or profit rate, any possible fees, the standard formula for working out the interest, whether the rate is fixed, variable or a mix, and a worked example of any early settlement fee. Key risks go in “Warning” boxes. How to read one line by line is a topic of its own: see the Key Facts Statement explained.

The same article also gives you the right to:

• a copy of the contract, with appropriate time to review it before you sign;
• copies of all final documents you signed, free of charge, and the same for any guarantor or co-signer;
• the reason if your application is rejected, unless it relates to financial crime compliance or the law prevents disclosure.

The APR

The Annual Percentage Rate (APR) is the yearly cost of credit including fees. Lenders must disclose it, and it covers the total interest or profit payable plus the cost of other fees, compounded over a year (Standards, Article 7), so you can compare offers on one number.

The same article requires interest or profit on loans, overdrafts and unpaid card balances to be calculated on the reducing balance, the amount you still owe. A flat rate looks lower than its reducing equivalent; our guide to flat rates and the APR works through the difference in AED.

Insurance is a separate product

Credit and insurance are separate products. Where a lender only offers insurance, it must tell you in writing that you can accept or reject it. Where insurance is a condition of the loan, you choose the insurer from a list the lender approves.

Central Bank guidance says you choose whether to pay for the insurance over the loan term or upfront, and the bank must explain this and get your agreement before charging you (Clarifications to Regulation 29/2011). When cover is mandatory, the lender must explain its purpose and disclose its own policy’s cost in writing. If premiums are added to the loan, it must tell you about the extra interest or profit.

Choice of insurer when cover is required

At least 3 insurers

Where insurance or takaful is a mandatory part of a credit or financing product, the lender must explain its purpose, disclose the cost of its own policy in writing and let the consumer choose a provider from at least 3 insurance or takaful providers the lender has approved.

The cooling-off period

After you sign a credit contract, you have 5 complete business days to change your mind and withdraw without undue cost. The lender must tell you about this right when you sign.

Cooling-off period

5 business days

Consumers have a cooling-off period of 5 complete business days after signing a contract for a credit, insurance or other CBUAE-regulated product, during which they can withdraw without undue cost.

If you withdraw, the lender refunds the fees you paid, minus reasonable direct costs it disclosed to you in writing in advance. You can give up the right only by signing a written waiver that warns you about committing immediately. Shari’ah-compliant contracts should include the same 5-business-day option. Using the cooling-off period on cards and other products is a topic of its own.

If the lender charges a loan cancellation fee, the Central Bank’s fee table caps it.

Maximum loan cancellation fee

AED 100

The loan cancellation fee on a consumer loan is capped at AED 100.

Worked example

Changing your mind after signing an AED 50,000 personal loan

The loan amount is an illustration. The rules we read do not say how interest for any days you held the money is treated, so ask the lender in writing before you withdraw.

1. Cooling-off window: 5 complete business days after you sign.
2. If the money was already paid out, you return it: AED 50,000.
3. Loan cancellation fee, if charged: at most AED 100 before VAT. AED 100 ÷ AED 50,000 = 0.002, or 0.2% of the loan.
4. For comparison, settling the same loan early after the window, with all AED 50,000 still owed: the early settlement fee cap is 1%, with a maximum of AED 10,000. 1% × AED 50,000 = AED 500 before VAT. On these figures, a loan cancellation fee is capped at AED 100 plus VAT, against up to AED 500 plus VAT in fees to settle the full balance early. A withdrawal refund can also be reduced by reasonable direct costs disclosed to you in advance.

No automatic limit increases or bundling

A lender may not issue or bundle a credit card with a loan or other credit product, or raise your card limit automatically, without your express consent. It may offer a higher limit, but only after a fresh check with the Etihad Credit Bureau (AECB) and with your express consent (Standards, Article 7).

A bank may lower a limit or close a card for business reasons, but it must give you notice and the reason. Closing a card at your own request has its own steps and deadlines: see closing a credit card.

Responsible lending

A lender must check that you can afford a loan before it grants one. Your total monthly repayments to all banks and finance companies must stay within 50% of your gross salary and regular income, and the lender must also look at your living costs.

Maximum debt burden ratio

50%

Monthly deductions for all loans and facilities from banks and finance companies together, including car loans, home loans, overdrafts and credit cards, must not exceed 50% of the borrower's gross salary and any regular income from a defined and specific source, at any time.

The affordability check goes beyond the debt burden ratio (DBR). The lender must weigh your living expenses, dependants and other obligations, such as guarantees you have given for other people’s debts, and stress-test the loan against higher interest or profit rates, giving you a written summary of the result. You also get a copy of the affordability assessment summary, dated and signed by you and the lender’s staff, and the lender must not lend more than you need or asked for just because your income allows it.

Worked example

Room under the 50% cap on a gross salary of AED 20,000

The salary and repayments are illustrations.

1. Maximum total monthly repayments: 50% × AED 20,000 gross monthly salary = AED 10,000.
2. Existing car loan and credit card repayments: AED 4,000 a month.
3. Room for new repayments: AED 10,000 - AED 4,000 = AED 6,000 a month.

The cap leaves this borrower at most AED 6,000 a month for new repayments; the lender’s affordability check can allow less.

Two ways of getting round the limit are banned outright: stretching a loan’s tenor to bring the ratio down so the lender can lend more, and closing a loan as paid only to open a bigger one over a longer term. If a lender offers to consolidate or refinance your loans, it must first show you in writing the total interest or profit you would pay by keeping the existing loans against the new one, and give you a copy to review during the cooling-off period (Standards, Article 7).

Fees and charges

Lenders may charge only the fees in the Central Bank’s fee table or fees it has approved. Capped fees are maximums before VAT, fee changes need two months’ notice, and interest on interest is not allowed.

Fees outside the Central Bank's table

Prior approval

Banks and finance companies may not charge commissions, fees, charges or fines other than those in the Central Bank's fee table without the Central Bank's written approval; a new uncapped fee, or a change above 5% to an uncapped fee, must be notified to and approved by the Central Bank in advance.

The Central Bank says it supervises lenders so they do not automatically charge the maximum where their actual costs are lower. All caps are stated before UAE VAT, which is added on top. Headline caps from the table:

Source: Regulation 29/2011, Appendix 2: Maximum Limits for Fees and Commissions.

The full fee table, product by product, is a topic of its own. Once you have a loan, the lender cannot change its terms during the tenor unless you agree in writing, and must give you at least two months’ notice of any change in commissions or fees. Lenders are also barred from taking blank cheques for loans, overdrafts or credit cards.

Notice before a fee change

2 months

Lenders must give customers at least two months' notice before changing commissions or fees, and may not change a loan's terms during its tenor unless the borrower agrees in writing.

Interest cannot snowball either. A lender may not charge interest or profit on interest that has built up, on any consumer credit product (Standards, Article 7).

While you repay

During the loan, the lender must pay out approved funds on time, warn you before raising the margin on a variable rate and stop charging interest if you settle in full early. Deferring instalments is possible but not a right.

Paying out an approved loan

10 business days

Approved funds on a credit product, other than mortgages and credit cards, must be paid out within 10 complete business days of the consumer signing the contract, unless another time frame is agreed in the contract.

If the lender cannot release the money in the agreed time, it must tell you in writing straight away, with the reason and the date the funds will be available. If the delay is the lender’s fault, you can cancel the contract without cost or penalty before the funds arrive.

On a variable-rate loan, the lender must tell you about any rate change, and the margin it adds on top of the base rate cannot go up until 30 calendar days after it tells you. For home loans priced on EIBOR, see EIBOR and your mortgage.

Notice before a margin increase

30 days' notice

Where a loan's rate can change, the lender may not raise the margin it adds to the variable base rate until 30 calendar days after notifying the consumer.

If money is tight, a bank can agree to defer instalments, at its discretion. A deferral must not push your future salary deductions above the debt burden limit. How to ask for a deferral or a new schedule is covered in negotiating with your bank.

Instalment deferrals

2 a year

Banks may defer up to two instalments in a year, at their discretion.

If you repay a loan in full early, the lender cannot charge interest for the rest of the term, and after a partial early settlement it must recalculate the interest on what is left (Standards, Article 7). Early settlement fees are capped in the table above; the steps are in early settlement of a personal loan.

If you fall behind

Falling behind does not remove your rights. The lender must discuss options with you, warn you in writing at set points, contact you only between 9 AM and 8 PM, and give you 60 days’ notice before selling your debt.

Where reasonably possible, the lender must discuss your difficulties with you before collection, enforcing guarantees or legal action. A payment more than 30 calendar days late triggers a written notice, and at 2 payments in arrears the lender must explain the possible consequences in writing.

First written notice

30 days

A lender must tell the consumer in writing straight away when a payment is more than 30 calendar days past due.

After more than 60 calendar days in arrears, a fuller written notice goes to you and any guarantor. It must show when the account fell behind, the arrears, the rate, any fees, who to contact and what continued non-payment can lead to, such as credit bureau reporting, sale of collateral, demands on guarantors and court action. Monthly updates follow.

Arrears notice

60 days

When an account is more than 60 calendar days in arrears, the lender must send a written notice to the consumer and any guarantor with the arrears amount, fees, consequences and contact details, then monthly updates.

Collection contact must be proportionate. Every caller must give the institution’s name, a contact number, its working hours and, on a phone call, their own name. If the lender uses a collection agent, it must tell you who the agent is, how much it is collecting and what it is authorised to do.

Collection contact hours

9 AM to 8 PM

Lenders and their collection agents may phone or visit a consumer about arrears only between 9 AM and 8 PM.

The lender may not visit your home or workplace about arrears without your express consent or a court order, and your information may go only to the credit bureau or an authorised collection agent, unless the law requires otherwise or you consent (Standards, Article 5). If it sells or transfers your debt, it must tell you first.

Before your debt is sold

60 days

If a lender sells or transfers a consumer's credit product to a third party, it must tell the consumer in writing 60 calendar days in advance and name the third party.

Late fees, credit report entries and court action are covered in what happens after missed payments. What debt collectors may and may not do in practice is a topic of its own.

Your credit data

A lender that reports wrong information about you to the credit bureau must correct it within 7 complete business days of becoming aware of the error. The same deadline applies once you tell the lender about it.

Correcting data sent to the credit bureau

7 business days

A licensed institution must correct errors in the data it reported to the credit bureau within 7 complete business days of becoming aware of them.

When you ask for a correction, the lender must acknowledge your request and check whether it is accurate. If a correction is needed, it must report it within 7 complete business days of your notice. If the lender collected and reported data unlawfully, it must ask the credit bureau to delete it. To see what lenders have reported about you, check your credit data with the AECB.

Making a complaint

Complain to the lender in writing first. It must acknowledge your complaint within 2 complete business days and send a final written response with detailed reasons within 30 complete business days. If you are not satisfied, you can take the complaint to Sanadak, the independent ombudsman unit, free of charge.

Acknowledgement of your complaint

2 business days

A bank or other licensed institution must acknowledge a written complaint within 2 complete business days.

Lender's final response

30 business days

A licensed institution must send its final written response to a complaint, with detailed reasons, within 30 complete business days of receiving it, or another limit the Central Bank sets.

The acknowledgement comes with a reference number. The final response must accept or reject the complaint, in whole or in part, give detailed reasons for any rejection and explain how to escalate. If the lender misses its deadline, it must tell you in writing and say why.

Sanadak, the ombudsman unit

Since 2023

Sanadak is the independent ombudsman unit for complaints against banks, finance companies and insurers licensed by the Central Bank, set up by a CBUAE regulation effective 15 March 2023.

Sanadak takes complaints from consumers and SMEs about institutions the Central Bank licenses, including insurers. Filing is free; only an appeal against its decision carries a fee. Under the Sanadak regulation, lenders must tell you in writing about your right to go to Sanadak and may not try to recover from you the costs they incur in its process. Who can file, when and how is set out in how to complain and use Sanadak.

Your rights at a glance

The main borrower rights under Central Bank rules, what the lender must do and where the rule comes from: