November saw International Adviser touch down in Dubai for our annual Future Advisory Forum.
In a funny twist, it felt a little bit like history repeating itself.
Blast from the past
On 14 November 2016, the UAE Insurance Authority issued Circular 33 (which would later become known as Circular 12 and finally BOD49), with our Future Advisory Forum taking place very shortly afterwards.
It stands as one of the most “popular” IA events ever, as we were forced to turn advisers away for fear we would breach the hotel’s health and safety rules.
The draft legislation outlined considerable changes for life and investment product providers, fund managers and intermediaries.
To say advisers were concerned and looking for guidance is something of an understatement.
Keynote speaker Muneer Khan, partner at law firm Simmonds & Simmonds, had the audience hanging on his every word as he outlined what the proposals could mean for the industry.
Fast-forward three years and, while numbers were not quite so high, the main topic of discussion among the advisers at the event on 20 November 2019 was still the regulatory changes that have now been confirmed by the regulator.
The pithily-named Insurance Authority Board of Director’s Decision No. 49 of 2019 Concerning Instructions for Life Insurance and Family Takaful Insurance (BOD49) will officially come into force on 15 April 2020.
The implementation period was initially expected to be up to two years, so it came as something of a shock when this was cut to just six months.
Some will argue that, technically, the financial services sector has already had three years to get to grips with the changes; which include, perhaps most significantly, commission caps.
Naturally, the question has to be: “Is six months enough time?”
Using our conference app, we put that question to the 166 advisers in attendance.
Not everyone responded, but 42% of those who did, do not believe that it is long enough.
Just 12% think that six months was too long, while 46% believe it is sufficient.
It’s not just financial advisers who will find themselves in a whole new world following the changes, product providers have been beavering behind the scenes to ensure their products will be compliant from April 2020.
Six-in-10 advisers at the Future Advisory Forum feel that the local product providers are offering enough support for businesses to make the transition to the post-BOD49 era.
But a third said that they think big insurers and investment houses could be doing more.
A small proportion (7%) are confident that their firm doesn’t need any support.
M&A activity across the global financial advisory space has been ramping up over the past few years, as regulations make it more expensive for companies to operate.
The Middle East is no different.
When asked via our polling app: “Will BOD49 drive more market consolidation?”, a staggering 82% said that it will, with 18% uncertain.
Nobody in attendance believed that it will not trigger acquisitions and sales.
But when asked about the M&A intentions at their respective firms over the next three years, 64% of the advisers very much expect things to stay the same.
One-in-10 will look to sell/merge, while 12% expect to acquire another company and 14% think their firm will buy more than one other company.
Same as it ever was?
Away from the event, there were some industry players who admitted they are sceptical that there will be much change following the implementation of BOD49.
There have been rumours of some international advisers who intend to “make hay while the sun shines” ahead of April 2020, before departing the UAE and moving on to pastures new.
Others suggest that ways around the regulations will be found to ensure that revenue streams and commissions are not impacted.
Whether this is just industry grumbling remains to be seen.
It echoes tittle tattle that abounded in the UK, Singapore and other regions after they rolled out similarly seismic regulations.
Ultimately, the success or failure of BOD49 lies with the Insurance Authority and how well it polices the rules it puts in place.