Savings, investments industry to benefit from reforms in GCC regulations

The savings, investments and life insurance industry stand to benefit from progressive regulations in the GCC region, according to a new report by strategic research consultancy, Insight Discovery.

The industry recognises that financial advice and related products are sometimes viewed by consumers as complicated and unsuitable, and companies have started to address the challenge by revising their business processes, organisational structures, training and product offerings.

A roundtable discussion among senior regional asset managers, which is associated with the report, found there are certain issues with regional regulations which need to be addressed.

Participants recognised that progress is being made, but much still needs to be done. There are opportunities for international life companies, asset managers and financial advisers to work with the various regulatory bodies to develop a robust regulatory framework for the region.

Nigel Sillitoe, CEO of Insight Discovery, said both the industry and consumers will benefit from any forward-looking regulatory reforms in the GCC’s financial services sector. “Such moves will make it easier for intermediaries to offer strategic advice and relevant products to the end consumer. Positive regulatory developments will complement ongoing industry initiatives to bring global best practice into the region’s financial services industry.

“Following interviews with senior executives of some of the region’s leading financial services firms, I was pleasantly surprised to find that various new industry minimum standards have now been implemented in line with global best practices. It is impressive that some firms are going the extra mile by insisting their advisers are appropriately certified. This is extremely good news for GCC consumers.

The report finds that there are low levels of life insurance density and penetration in the GCC countries, a lack of understanding of available products and low trust levels of financial advisers among consumers

Regulatory changes are difficult to predict and so far here is little co-ordination between regulators in different countries and, in some instances, within the same country, the report said.

However, international life companies and asset managers play a key role in educating financial advisers who in turn should increase consumer understanding of life insurance and other investment products.

Panellists said the GCC region has the potential to be one of the world’s best markets for the financial services industry. But the development of the market is challenged by different regional regulations which appear to be unclear, unpredictable and sometimes archaic.

Others suggested the regulators and the financial services industry need to work together towards a suitable environment for the ultimate benefit of GCC consumers. Financial advisers play a key role in intermediating between consumers and the industry and it is therefore essential they build trust and educate customers on various aspects of savings, investments and life insurance products.

The participants in the roundtable discussion were: Fadi El-Khoury of Amundi Asset Management, Farah Foustok of ING Investment Management, Peter Duke of Fidelity Worldwide Investment, Steven Greenfield of Zurich International Life, Dan Rudd of HSBC Global Asset Management, Matt Waterfield of Friends Provident International, Reza Yazdi of Morningstar and Arwa Hamdieh of Financial Services Association (UAE).

Arwa Hamdieh, co-founder, Financial Services Association (UAE) concluded: “The lack of familiarity with the financial services industry is preventing GCC consumers from utilising advisory services for their financial planning. Regulators and financial services companies in the region should collaborate to address this issue, initially by segregating the life industry from the general insurance industry and by investing in better trained and certified life insurance professionals. This will improve the consumers’ perception of the financial services industry and help to promote its role in creating a safety net for individuals over the long term.”

The full report can be downloaded at www.insight-discovery.com

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