The Abu Dhabi Global Market (ADGM) Registration Authority has initiated a public consultation on its proposed Consumer Protection Regulations 2025 (Consultation Paper No. 4 of 2025). These draft regulations aim to establish a comprehensive consumer protection framework for retail products and services within ADGM, introducing new obligations for retail providers and strengthening consumer rights.
Purpose of the Proposed Regulations
The primary objective of these regulations is to enhance consumer welfare and confidence in the ADGM retail market, particularly given ADGM's recent expansion and the increasing number of retail businesses operating under ‘Category C' licenses.
The proposed regulations introduce a comprehensive set of requirements for all ADGM-licensed or permitted entities engaged in ‘Category C' retail activities. To ensure compliance, businesses will need to focus on several key areas:
- Review and Update Contracts: It's crucial to revise standard terms and conditions, invoices, and sales documentation. This means removing any clauses that are now prohibited, such as blanket “no returns or exchanges” clauses, unilateral termination rights, or waivers of consumer rights.
- Product Labelling and Information: All products must be clearly labelled with essential information. This includes details like country of origin, shelf life, storage instructions, and any associated risks. Additionally, clear instructions for use and installation must be provided to consumers
- Advertising and Promotions: Providers must refrain from misleading advertisements. A new layer of regulatory oversight will be introduced as businesses will need to obtain Registrar approval before announcing any promotions or sales.
In addition, the proposed regulations make provision for:
1. Stricter After-Sales and Warranty Requirements
Providers will need to establish and clearly communicate written procedures for offering warranties, maintenance, and spare parts. Crucially, warranty documents must explicitly state their duration, coverage, and any exclusions. If repairs extend beyond seven days, providers are mandated to supply a comparable replacement product or agree on alternative compensation with the consumer. Furthermore, frequently requested spare parts must be supplied within seven days, while less common parts should be provided within a reasonable timeframe. If parts are unavailable, alternative solutions must be offered to the consumer.
2. Expanded Consumer Rights and Remedies
Consumers will see an expansion of their rights and available remedies under these new regulations. For defective products and services, consumers gain the right to choose between a refund, replacement, or repair for products. For defective services, consumers can demand re-performance or a full refund if the provider fails to remedy the issue. The regulations also significantly restrict the use of “no returns or exchanges” clauses in return and exchange policies, allowing them only in specific cases, such as for perishable goods, custom-made items, or when a defect was disclosed at the time of purchase.
3.Increased Regulatory Oversight and Enforcement Risks
The Registrar will have significantly increased powers, leading to greater oversight and potential enforcement risks for businesses. The Registrar is empowered to receive and investigate complaints, issue determinations, and impose financial penalties for non-compliance. They can also order product recalls and cooperate with other authorities. Regarding product safety, providers are obliged to notify the Registrar and withdraw products from the market if defects are discovered that affect consumer health or safety. The Registrar can direct recalls and even seize products if deemed necessary.
4.Operational and Strategic Adjustments
Businesses will need to make several operational and strategic adjustments to comply with the new regulations. This includes implementing or updating internal processes for complaint handling, warranty management, and overall compliance monitoring. Comprehensive staff training will be essential, particularly for employees involved in sales, customer service, and marketing, to ensure they understand and adhere to the new requirements. While these regulations are designed to align with the UAE's federal consumer protection regime, businesses must ensure alignment with both ADGM and federal requirements, which may involve reconciling any differences between the two frameworks.
5. Legal and Financial Exposure
Non-compliance could lead to increased legal and financial exposure. Consumers will have the right to file direct consumer claims with the ADGM Court for declarations and compensation if providers fail to meet their obligations, increasing the risk of litigation and financial liability. Furthermore, non-compliance, product recalls, or adverse determinations by the Registrar can significantly damage a business's reputational risk and erode consumer trust.
Market and Competitive Implications
The regulations are expected to create a level playing field by standardizing consumer protection across all ADGM retail businesses, potentially raising the bar for market entry and ongoing operations. Ultimately, these enhanced protections are likely to boost consumer confidence in the ADGM retail market, which could benefit compliant businesses through increased customer loyalty and market share.
Recommended Actions and Deadlines
We strongly advise all ADGM retail providers to:
- Carefully examine the proposed regulations to assess the potential impact on business operations, contracts, and compliance frameworks.
- Consider submitting comments or concerns, especially if the proposals present operational challenges or conflict with your existing practices.
- The deadline for submitting feedback to the ADGM Registration Authority is June 8, 2025. Written comments should be sent to the ADGM Registration Authority at ra.consultation@adgm.com, referencing Consultation Paper No. 4 of 2025.
Our team is ready to assist you by:
- Reviewing your current practices, identifying compliance gaps, and helping you prepare tailored feedback for the consultation.
- Offering strategic advice on aligning your business with the new regulatory requirements and minimizing legal and operational risks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
