DUBAI // Nearly two in five Emiratis in Dubai owe money on a loan and about 15 per cent of those defaulted on at least one monthly payment in the previous year, a government survey has found.
About 14 per cent owed money for living expenses, 13 per cent for household appliances and 11 per cent for marriage expenses.
Emiratis were more likely than expatriates to borrow money and more likely to have defaulted.
The research was conducted by Dubai Community Development Authority (CDA) with Dubai Statistics Centre. Staff surveyed nearly 20,000 Dubai residents last year.
The CDA director general Khaled Al Kamda said more research was needed into Emirati debt. "What are the issues related to loans?" he said. "Is it a loan for something essential, or is it a luxury product?"
More than 60 per cent of Emirati borrowers owed money on a car loan, and half on a mortgage. "Homes are normal and very important, that's understandable," Mr Al Kamda said. "Cars here are an issue. We need to see, what is the car?"
About 37 per cent of Emiratis surveyed owed money, compared with about 16 per cent of western expatriates, 13 per cent of Arab expatriates and 10 per cent of Asian expatriates.
About 5 per cent of the western borrowers had defaulted on a payment in the previous year, compared to 3.7 per cent of Asian borrowers and 2.1 per cent of Arab expatriate borrowers.
Researchers also asked whether residents believed they were conservative spenders. Eighty per cent of Emiratis said they were, 10 per cent said they weren't and the last 10 per cent were neutral. Of all the survey respondents, expatriate and Emirati, 93 per cent said they believed they were conservative spenders.
"Part of empowering people or encouraging people to manage their expenditures is really to see how they feel about their spending behaviour," Mr Al Kamda said.
On National Day last year, the President, Sheikh Khalifa, set up a Dh2 billion fund to clear the debts of more than 6,000 Emiratis. The decree followed the recommendation by a higher committee charged with tackling Emirati debt.
In addition, Central Bank regulations introduced last year capped the amount banks can lend to customers at 20 times their monthly salary.
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A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
At a glance
- 20,000 new jobs for Emiratis over three years
- Dh300 million set aside to train 18,000 jobseekers in new skills
- Managerial jobs in government restricted to Emiratis
- Emiratis to get priority for 160 types of job in private sector
- Portion of VAT revenues will fund more graduate programmes
- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government
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Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
