Dubai International Financial Centre Rules on the Regulatory Perimeter of the Dubai Financial Services Authority and Suitability Standards in Al Khorafi v Bank Sarasin-Alpen and Bank Sarasin
Type
E-journal
Date
3 Sep 2014
Jurisdiction
Dubai International Financial Centre
Taxonomy
General Civil Procedure & Administration of Justice, Financial Services & Activities, Financial Institutions, Relationship Between Banker & Customer, Regulation & Offences, Lending & Security
Copyright
LexisNexis
Relevant company
Clifford Chance
Legal reference
DIFC Law No. 1/2004
Cases reference
DIFC Case No. 026/2009
Analysis
The Dubai International Financial Centre Court of First Instance (the Court) has found Bank Sarasin & Co Ltd, a Swiss incorporated bank with no registered presence in the Dubai International Finance Centre (DIFC), and its Dubai Financial Services Authority (DFSA) authorised DIFC subsidiary, Bank Sarasin-Alpen ME Limited (Sarasin-Alpen), in breach of the DIFC Regulatory Law with liability to pay compensation to the members of a family who purchased US $200 million of structured products, which were financed, in part, by loans from Bank Sarasin and from another bank.
The ruling of Sir John Chadwick addresses two areas of DFSA regulation: (1) how far does DFSA regulation extend, and (2) acceptable practice in treating customers fairly (i.e. assessing suitability) in relation to complicated financial products.
Current understanding of the DFSA's regulatory perimeter is seriously challenged by the reasoning for holding Bank Sarasin liable [DIFC Case No. 026/2009].