Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The UAE’s new Federal Decree Law No. (6) of 2025, which came into effect on September 16, represents one of the most far-reaching reforms in the country’s financial sector, according to a report by S&P Global Ratings.
The law modernises and unifies the UAE’s financial regulatory framework by bringing banks, reinsurance and insurance (re/insurance) companies, other financial institutions, and virtual asset providers under the same legislation. The legislation consolidates and replaces Federal Decree-Law No. (14) of 2018, which governed the CBUAE and licensed financial institutions, and Federal Decree-Law No. (48) of 2023, which covered insurance activities.
According to Puneet Tuli, Credit Analyst at S&P Global Ratings, the law “reduces some regulatory shortcomings regarding fintech licensing, consumer protection, and the regulation of digital payments and virtual assets.” It also addresses emerging risks such as digital contagion and cybercrime, while providing a clearer mandate to the Central Bank of the UAE (CBUAE) to safeguard monetary and financial stability.
According to S&P, the law grants the CBUAE wider powers to manage the orderly failure of non-viable licensed financial institutions (LFIs)—including banks, re/insurance companies, and other financial entities—to prevent systemic contagion.
The CBUAE may intervene in LFIs undergoing restructuring or winding-down by replacing senior management and directors, appointing a resolution administrator to take control of operations, or even creating a temporary bridge institution to maintain continuity of critical services.
The law also allows the central bank to set up a separate asset management vehicle for transferring non-performing or hard-to-value assets, and to carry out bail-ins of certain liabilities to recapitalise entities providing essential financial functions.
S&P said the CBUAE’s new oversight now extends to digital money, payment tokenisation, and stored-value facilities, bringing mobile wallets, payment gateways, and fintech firms under its direct supervision. The law also introduces minimum standards for cybersecurity, operational resilience, and data protection across payment service providers.
On the consumer side, stricter fines and penalties are expected to improve market conduct and customer protection. The CBUAE can now impose severe penalties for misconduct, such as mis-selling financial products, using hidden fees, or failing to resolve customer complaints.
Decisions made by the CBUAE’s complaints unit will be final and enforceable on financial and insurance institutions.
In its assessment, S&P Global Ratings said: “We evaluate regulators' ability to preserve financial stability through business and economic cycles, particularly during periods of stress, as part of our banking industry country risk assessment. While the new law broadens regulators' remit to areas that are currently unregulated or insufficiently regulated, implementation will be key.”
S&P added that the introduction of a resolution regime does not necessarily mark a departure from the authorities’ long-standing willingness to support the banking system in case of stress, noting: “For now, we still consider that authorities in the UAE are highly supportive of local banking systems.”
The agency expects that the new framework will improve transparency and lead to stricter enforcement of supervision. However, it said it does not anticipate any immediate rating actions on UAE insurers or a change in its overall view of the domestic insurance industry.
“This expectation is based on our assessment that the evolving institutional framework remains supportive of growth and profitability within the sector,” S&P added.
