Financial Services Compliance and Regulation

Market Conduct Risk

Conduct risk refers to how well a financial institution ensures fair outcomes for consumers, strengthens market integrity and builds public trust.

The Central Bank of the UAE (CBUAE), through its Consumer Protection Regulation (CPR) and Consumer Protection Standards (CPS), introduced via Circular No. 8/2020, defines conduct risk based on the principles of fairness, integrity and transparency. All Licensed Financial Institutions (LFIs) are required to embed these principles into their business practices and organizational culture, supported by a consumer-centric and robust conduct risk management framework.

Evolving Market Conduct Landscape

Over the past four years, LFIs have increasingly recognized that strengthening consumer protection is critical to thriving in today’s competitive and fast-evolving financial environment. Key advancements include:

  • Implementation of robust and effective controls
  • Alignment with the CPR and CPS requirements
  • Adoption of consumer-centric practices across operation

 

 

Despite these efforts, LFIs continue to face challenges in Market Conduct, as highlighted by regulators during their reviews. These challenges stem from a range of factors, including:

  • A constantly shifting regulatory landscape
  • Organizational culture that may not fully support consumer-centric values
  • The introduction of innovative financial products with complex risk profiles
  • Rapid technological advancements, such as AI and digitization
  • Rising consumer expectations for transparency, responsiveness and personalization

Consumer Journey and Key Considerations for Market Conduct Control Framework

While setting up or assessing the existing control framework, LFIs should consider the following:

Market Conduct Control Framework

Key Challenge Areas for LFIs in Market Conduct Risk

Regulators have identified several areas where LFIs must enhance their practices:

Key Challenge Areas for LFIs in Market Conduct Risk

How Kroll Can Help

Kroll brings deep expertise in financial regulation, compliance and risk management, with a proven track record of supporting financial services firms worldwide. We have worked with numerous regulators including the FCA, HKMA, MAS and the Central Bank of Ireland on matters related to market conduct and consumer protection. Kroll can also support firms in strengthening the conduct risk framework.

Our services include:

  • Market Conduct Risk Maturity Assessment
  • Market Conduct Risk Control Design and Operating Effectiveness Assessment
  • Remediation Support and Issue Validation
  • Training
  • Internal Audit Support

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