As with many financial services regulators, it has a number of different functions and powers, including investigating complaints concerning a range of issues, such as misconduct, a contravention of a law or rule, or failing to observe high standards of integrity and fair dealing.

For prospective claimants in DIFC-based fraud or regulatory breach matters, pursuing such a complaint to conclusion could be a useful first port of call, subject to their circumstances.

Why Refer to DFSA

Firstly, for victims of fraud or similar poor behaviour from financial institutions, e.g. individuals who have invested (and lost) money with financial institutions with questionable regulatory practices, under DIFC law, often one of the more straightforward causes of action is under DIFC Law No. 1 of 2004 (the “Regulatory Law”).

Article 94 of the Regulatory Law provides that where a person (including a company) intentionally, recklessly or negligently breaches a duty/obligation under the Regulatory Law/ DFSA Rules (or other legislation administered by the DFSA), or commits “fraud or other dishonest conduct”, they are liable to compensate other persons for any loss or damage caused by such breach/ conduct.

If a prospective claimant is considering an action which is premised upon a breach of DFSA Rules or the Regulatory Law (or similar) then, subject to their circumstances, making a complaint to the DFSA might be the easiest way to start.

The DFSA is open to considering complaints on a number of issues, including complaints regarding contravention of the DFSA Rules or the Regulatory Law.

Once a complaint has been made and accepted by the DFSA for further investigation, the DFSA has far reaching powers which it can utilise during such investigation, including: entering premises to inspect and copy documents/ information, compelling production of documents/ information and compelling individuals to attend a recorded interview.

Once the investigation is finished, and a breach of the Law/ Rules has been established, the DFSA will publish their decision publicly, which a prospective claimant could then utilise within any litigation which they intend to commence.

This route may be appealing to some. In particular, for those who may have difficulty financing litigation, are very unsure of the merits of their case, and/or do not have any significant time concerns, making such a complaint first, before litigation, may be advisable. In making such a complaint, a prospective claimant can effectively utilise the resources of the DFSA to establish facts, and possibly shore up their case, before litigation is commenced, without having to expend significant sums on legal fees. As such, for some litigants, it may make sense to get the DFSA to do the hard work, before deciding to make a claim.

However, this process can take a long period of time: sometimes many months, or even longer. For some prospective claimants, waiting for the conclusion of such an investigation will not be appropriate, especially those concerned about the dissipation of assets and/or liquidity of the financial institution in question, who may want to take action more quickly, including seeking interim remedies. Additionally, there is also the risk that such an investigation may yield no further helpful information and no adverse decision, and the complainant is back to square one.

However, even for those who are time conscious, making such a complaint may still be a useful avenue to pursue, whilst litigation is pursued simultaneously, as it is possible further information may come to light through this investigation, whilst the pressure of the DFSA investigation may be of some tactical benefit.

Ultimately, whether it is advisable to make such a complaint before commencing (or whilst conducting) litigation, will depend upon the circumstances of the case and of the prospective claimant, but it is a useful additional avenue to consider.

The Process

The complaint, investigatory and decision-making process, is set out in detail within the DFSA’s Regulatory Policy and Process Sourcebook (“RPP Sourcebook”, available through the DFSA website: The DFSA Regulatory Policy and Processes Guide (thomsonreuters.com)).

In summary:

• Complaints must be submitted in writing and can be completed physically or online.
• Within 28 days of a complaint (or within 28 days of provision of further requested information), the DFSA will usually confirm to the complainant, either that no further action is being taken, or that the matter is being referred to the relevant DFSA department (usually the Supervisory Department) for further investigation.
• During the investigation process, the DFSA does not release any information relating to the alleged contraventions of DFSA Rules/law, except to advise the complainant of the outcome of its assessment.
• Following the investigation, if action is appropriate, the case is submitted to the Decision-Making Committee (“DMC”), who then send out a ‘Preliminary Notice’ to the subject of the complaint, setting out the DFSA’s comments and proposed actions. These could include financial penalties and/or public censure.
• Following the preliminary notice, the subject of the complaint may make written representations to the DMC, after which the DMC confirms its final decision. If the subject of the complaint wishes to appeal the decision, it then has 30 days to refer the matter to the Financial Market’s Tribunal (“FMT”). The FMT is operationally independent of the DFSA and will consider the case afresh. Following the FMT’s determination, there is also a further right of appeal (for either the complaint subject or the DFSA) to the DIFC Court on points of law.

Importantly for a prospective claimant, the RPP Sourcebook confirms that the DFSA will generally make public any decision made by the DMC, either after the period for referral to the FMT has expired, or when the matter is referred to the FMT. However, it is understood that the DFSA can sometimes be receptive to requests from complaint subjects to delay such publication until after the FMT has considered the matter.