DUBAI: The Dubai Financial Services Authority (DFSA), the independent regulator of financial services within Dubai International Financial Centre (DIFC), has launched a public consultation on proposed enhancements to its Islamic finance regulatory framework.

The consultation, aimed at improving clarity on endorsement requirements and disclosure standards, aligns with national objectives including the UAE Strategy for Islamic Finance and Halal Industry and Dubai Economic Agenda (D33), reinforcing the UAE’s position as a global hub for Islamic finance.

Consultation Paper No. 172 (CP 172) introduces clearer guidance on when Authorised Persons require an endorsement to conduct Islamic financial business, alongside strengthened disclosure requirements for Takaful, a Shari’a-compliant mutual insurance system, and targeted technical updates to the Islamic Finance Rules (IFR) module.

The proposals come as the Islamic finance sector continues to expand. The UAE remains a leading global market, ranking fourth globally by assets and third in financial performance and supporting ecosystem metrics in 2024, according to the Islamic Finance Development Indicator (IFDI). DIFC is also one of the world’s largest venues for Sukuk issuance, with more than US$100 billion in outstanding listings.

Charlotte Robins, Managing Director of Policy and Legal at the DFSA, said, “As the Islamic finance sector continues its strong growth within DIFC, the UAE and globally, we aim to ensure our regulatory framework provides the clarity and certainty firms need to operate confidently within appropriate boundaries.

“These proposals reflect our ongoing engagement with the industry and our commitment to supporting the development of this strategically important sector,” she added.

The DFSA operates as a Shari’a systems regulator, requiring Authorised Persons to establish systems and controls to manage Islamic financial business and associated risks, without determining Shari’a compliance of products.

Under the proposals, Authorised Persons would require an Islamic endorsement if they present their operations or products as Shari’a-compliant, including fund managers operating Islamic-labelled funds. However, firms distributing Islamic products without making such representations would not require endorsement, provided they meet existing client protection requirements.

To enhance consumer protection, the DFSA also proposes mandatory disclosures for all Takaful products, including contract features, fee structures, surplus-sharing arrangements and potential additional contributions.

The consultation is open to Authorised Firms, market institutions, and industry stakeholders, with submissions accepted until 19th June, 2026. The DFSA will review feedback before finalising amendments to its Rulebook.