The Ultimate Guide to Debt Collection Regulations in the UAE

Introduction

Debt collection often sounds intimidating, especially when you’re on the receiving end of persistent calls or late-payment notices. But here’s the truth: debt collection is legal in the UAE,  harassment is not.

This article breaks down everything you need to know about debt collection laws in the UAE, including what banks and agencies can and cannot do, what your rights are as a consumer, and how to take action if those rights are violated.

By the end, you’ll understand the full landscape, from Central Bank regulations to consumer protection remedies, so you can stay informed, confident, and protected.

Summary

Debt collection in the UAE operates under a detailed legal and regulatory structure governed by the Central Bank of the UAE (CBUAE).

At the core lies Federal Law No. 14 of 2018, which grants the Central Bank the authority to regulate financial institutions. Under this law, the Consumer Protection Regulation (Circular No. 8/2020) and its accompanying Consumer Protection Standards and Rulebook establish how licensed banks, finance companies, and debt collection agents must operate.

These rules are not mere suggestions; they are binding obligations that ensure fairness, transparency, and accountability in how banks deal with consumers, particularly during financial distress.

In short:

• Banks must follow strict debt collection policies that protect consumers.
• Consumers have enforceable rights to fair treatment, privacy, and due process.
• The Central Bank has the authority to investigate and sanction institutions that cross the line.

Together, these frameworks create a balance between legitimate debt recovery and consumer dignity, a balance that defines the UAE’s modern financial system.

Importance and Impact

Debt collection laws in the UAE aren’t only about protecting consumers, they are also about preserving the integrity of the financial sector.

When banks handle collections responsibly, they strengthen public confidence and maintain long-term relationships with clients. When they don’t, they risk penalties, lawsuits, and reputational damage.

For consumers, these regulations are life-changing. They ensure you have:

•  Clear communication from your bank,
•  Time and opportunity to resolve arrears, and
•  Legal protection against intimidation or misconduct.

The result? A financial environment where both sides, lender and borrower, are held to standards of fairness, empathy, and accountability.

Key Provisions of UAE Debt Collection Law

Debt collection in the UAE is guided by Section 5.2.5 of the Central Bank Consumer Protection Rulebook, which outlines exactly how banks and their agents must operate.

1. Written Policies and Early Dialogue

Banks must maintain written procedures for collecting debts and are encouraged to discuss financial difficulties with borrowers before initiating any aggressive action.

2. Mandatory Communication and Notice Periods

If a payment is overdue by 30 days, the bank must reach out to understand the reason. If arrears continue beyond 60 days, the bank must issue a formal written notice including:

• The start date of arrears,
• Number and amount of missed payments,
• Interest or profit rate,
• Contact information for the collections department, and
• Consequences of continued non-payment (such as legal action or sale of collateral).

3. Ethical Communication

All communications must be reasonable and non-excessive, limited to approved channels like phone, SMS, email, or registered mail. Banks and agents are prohibited from:

• Visiting homes or workplaces without consent,
• Contacting outside 9 AM to 8 PM, or
• Making repeated calls that amount to harassment.

4. Third-Party Collection Agents

Banks can appoint licensed collection agencies, but they must notify the consumer in writing of the agency’s name, authority, and the exact amount to be collected. Agencies are legally bound by the same ethical standards as banks and must maintain full transparency and confidentiality.

5. Record Keeping

All communications, from emails to phone calls, must be recorded and retained for at least 5 years after the debt is settled or written off.

6. Data Protection

Under Article 6 of the Consumer Protection Standards, consumer data must be handled with strict confidentiality. Unauthorized disclosure to neighbors, employers, or third parties is prohibited and punishable.

Penalties for Violations

When banks or their agents violate these laws, the consequences can be severe.

Administrative penalties by the Central Bank may include:

• Monetary fines,
• Corrective directives,
• Public reprimands, or
• Suspension or revocation of licenses.

Criminal penalties may also apply. Under Federal Decree-Law No. 31 of 2021 (Crimes and Penalties Law):

• Anyone who uses threats or coercion to obtain money or property faces imprisonment and fines.
• Verbal or implied threats can lead to up to one year in jail or a fine up to AED 10,000.

For consumers, these protections mean one thing: you are not powerless.

Reporting Debt Collection Violations

If you’re being harassed or mistreated by a bank or collection agency, here’s what to do:

1. File an Internal Complaint with Your Bank Every bank in the UAE must have a Consumer Complaints Unit. Submit a written or online complaint. The bank must respond within 30 days, providing a clear, documented outcome.
2. Escalate to the Central Bank of the UAE If the issue remains unresolved, escalate it through the CBUAE Consumer Protection Portal. The Central Bank investigates violations and can impose sanctions or financial penalties.
3. File a Civil Claim Under Federal Law No. 42 of 2022 (Civil Transactions Law), you may file a case for defamation, breach of privacy, emotional distress, or financial harm.
4. Report Criminal Misconduct If a collector threatens violence or unlawfully exposes your information, file a police complaint; such acts can amount to criminal offences.
5. Consult a Legal Professional Legal experts can help you navigate complaints, represent you before authorities, and negotiate fair settlements.

How LYLAW Can Help

Navigating debt collection disputes can be complex, but you don’t have to do it alone.

At LYLAW, our experienced legal team represents clients facing unfair or unlawful debt collection in the UAE. We help by:

• Reviewing your loan agreements and communication records,
• Drafting formal complaints and escalation documents,
• Liaising with the Central Bank or relevant authorities, and
• Pursuing civil or criminal remedies when necessary.

Whether you’re a consumer in distress or a company seeking compliance guidance, LYLAW provides strategic, ethical, and effective legal support tailored to your case. Visit lylawyers.com to learn more or schedule a consultation with our legal team.