Banks and marketing executives warned yesterday the ban on unsolicited sales calls across the banking industry could lead to job losses and an increase in annoying text messages for customers.
On Monday, the Central Bank issued a circular forbidding banks and other financial companies from phoning consumers. The calls were "causing such customers a lot of disturbances", the Central Bank said.
In response to the directive, First Gulf Bank said it was considering reducing the scope of its contract with an outside company that manages its telemarketing operations and was exploring alternatives.
"We would have to enhance other channels to sell products to our customers through different methods of marketing," said Abdulwahed Juma, the head of corporate communications at First Gulf Bank. "If it is affecting us, it would affect the entire industry."
Other banks were likely to be considering similar moves, while banks that used their own employees to make calls could be forced to lay off some of their staff, said Dominick Keenaghan, the president of Insights, a Dubai company that offers training and other services to call centres. He said it appeared the circular addressed only voice calls, which could provide an opening for companies looking for other low-cost ways of reaching consumers.
"I guess we can expect to receive more spam texts until people start complaining about that," he said.
Emirates NBD, the country's largest bank by assets, said it would consider increasing the number of text messages and e-mails it sent to consumers informing them about its financial products.
The Central Bank's move caught most banks by surprise, and many said yesterday they were still considering its implications.
"We are currently assessing and seeking clarity on the scope of the new directives," said Chris de Bruin, the head of consumer banking for Standard Chartered UAE. Barclays released a similar statement.
It was not clear whether the circular applied only to retail banks or also included financial advisory firms that broker insurance policies and other investment products. PIC-deVere, the region's largest advisory firm, is among the few firms licensed by the Central Bank.
"We will, of course, be reviewing in detail what this latest update may mean to us," said Spencer Lodge, the managing director of PIC-deVere.
Many advisory firms in the UAE are licensed through the Insurance Authority rather than the Central Bank.
Tim Searle, the chief executive at the Dubai advisory company Globaleye, said that as a result, he did not believe the circular applied to his company. He added that telemarketing was an important part of the industry.
"Our products typically should be bought and not sold, but the reality is no one wakes up in the morning and says: 'I need to sort out my pension', or 'I need some life insurance'. You need someone to give you the impetus," he said.
The regulator was possibly aiming to clamp down on companies aggressively selling specific investments, as opposed to contacting consumers to introduce those companies' range of services.
"All we are offering them is the opportunity to meet," he said.
Although unpopular among consumers, telemarketing has long been a central part of the regional financial services industry.
Among retail lenders, some banks appear more exposed than others. RAKBank, which declined to comment, has been the most aggressive issuer of personal loans, with retail customers accounting for Dh14.5 billion (US$3.94bn), or 97.6 per cent of its total lending book last year, according to the bank's financial statements.
At Abu Dhabi Islamic Bank, murabaha and ijara financing and other Islamic financing for individuals accounted for 44.9 per cent of lending last year, while retail loans accounted for 34.3 per cent of First Gulf Bank's loan book.
halsayegh@thenational.ae
