The UAE issued Federal Decree-Law No. (6) of 2025 on 10 October 2025, establishing a new legal framework for the UAE Central Bank and the regulation of financial institutions, activities, and insurance. This comprehensive law unifies banking and insurance oversight under one framework, replacing laws from 2018 and 2023. It highlights the UAE’s ongoing efforts to modernize financial laws, enhance stability, and align with global standards while strengthening the Central Bank’s independence and role in maintaining stability.
Financial Inclusion and Accessibility for All
Improving financial accessibility is a key objective of Federal Decree-Law No. (6) of 2025. The law requires all licensed banks, insurers, and financial institutions to provide basic financial services to all community members. Institutions must not unreasonably deny services and should use digital platforms to reach underserved segments. The Central Bank will also lead national financial awareness campaigns with industry and community partners to improve financial literacy and access.
The decree reinforces responsible lending by requiring credit facilities to align with customers’ income levels, preventing over-indebtedness and curbing irresponsible lending. These measures promote financial inclusion while protecting consumers from predatory practices.
Enhanced Consumer Protection and Dispute Resolution
The new law strengthens consumer protection by streamlining complaint and dispute resolution. All customer complaints across banks and insurers will now be handled by a single independent entity, Sanadak, ensuring a consistent and transparent process. This unified system enhances trust and simplifies access to redress.
For smaller financial disputes, the law establishes specialized judicial committees to resolve claims up to AED 100,000. Their decisions are final and immediately enforceable, giving consumers and small businesses a faster, more cost-effective alternative to court proceedings.
Early Intervention and Financial Stability Measures
To safeguard financial stability, the law grants the Central Bank broad powers to act early when a financial institution shows signs of distress. These measures include:
- Recovery Plans: Requiring the institution to implement a recovery or turnaround plan to restore financial health.
- Capital and Liquidity Boosts: Imposing additional capital buffers or liquidity requirements to strengthen the balance sheet.
- Business Restructuring: Mandating changes to business strategy or operations to reduce risk exposure.
- Management Changes: Appointing an interim committee or assuming management control, if necessary, to stabilize the institution.
- Merger or Exit Strategies: Facilitating a merger, acquisition, or orderly liquidation of assets, with special provisions for insurers to take corrective action or face intervention.
These early intervention powers aim to protect depositors and policyholders by ensuring that any emerging financial troubles are swiftly contained. By addressing issues such as capital shortfalls or liquidity crunches at an early stage, the Central Bank can prevent wider contagion in the financial system.
As the designated Resolution Authority, the Central Bank has full authority to manage failing institutions. It may replace management, recover funds from those responsible for mismanagement, appoint external administrators, or restructure and transfer assets. In severe cases, it can establish bridge entities or oversee an orderly wind-down.
Monetary System Stability and Foreign Reserve Management
Federal Decree-Law No. (6) of 2025 reinforces the Central Bank’s primary mandate to maintain the stability of the UAE dirham and safeguard the financial system. It defines the Bank’s responsibilities for setting monetary policy, supervising licensed financial activities, and monitoring systemic risks in line with international standards. This clarity strengthens governance and accountability in the Bank’s operations.
The law also highlights prudent management of foreign reserves as essential to monetary stability. The Central Bank must maintain sufficient reserves to back the monetary base, support the dirham’s peg, and meet international obligations. It further promotes sustainable finance and strong governance within the Central Bank.
Strengthened Enforcement and Administrative Penalties
Federal Decree-Law No. (6) of 2025 strengthens compliance by substantially increasing administrative penalties for financial violations. The maximum fine the Central Bank can impose rises from AED 200 million to AED 1 billion for serious breaches. Fines may also reach up to ten times the value of the violation or illicit gain, ensuring penalties scale with the severity and financial impact of the misconduct.
Enforcement has been streamlined through automatic deduction of fines from offenders’ bank accounts or Central Bank reserves, preventing payment delays. The Central Bank may also settle violations before court proceedings, allowing corrective actions or reduced penalties if resolved early.
To promote transparency, the Central Bank can publish enforcement actions on its website, publicly identifying violators to deter future misconduct. Together, these measures—higher fines, automatic recovery, early settlements, and public disclosure—create a stronger, faster, and more accountable enforcement regime that underscores the UAE’s zero-tolerance stance on financial non-compliance.
Prudent Credit Practices: Adequate Guarantees for Facilities
The decree-law requires banks and financial institutions to obtain adequate guarantees for all credit facilities granted to individuals and sole proprietorships. This means loans and financing must be backed by sufficient collateral or guarantees to cover potential exposure.
The rule reduces unsecured lending risks, promotes responsible credit practices, and protects both lenders and borrowers from excessive default risk. It complements existing measures that align lending with income levels, ensuring that credit growth remains prudent and sustainable. Overall, this requirement supports financial stability by limiting the accumulation of high-risk, unsecured debt.
Conclusion
Federal Decree-Law No. (6) of 2025 marks a shift in how the UAE manages financial regulation. By unifying oversight of banking, financial services, and insurance, the law simplifies governance and brings consistency across the sector. It tackles real-world risks head-on — from irresponsible lending and customer disputes to system-wide threats from failing institutions. The law gives the Central Bank clear tools for oversight, early intervention, and enforcement, while holding financial institutions to higher standards. At the same time, it places strong emphasis on inclusive access to services and financial literacy, ensuring that growth is both stable and equitable.
Download the article here.