UAE Central Bank Updates SME Protection Regulations

Welcome SMEs to a new era of protection.

Senior management must embed a culture of fair treatment. Policies must be updated. Boards must own it. Products must be designed with it. Staff must be trained on it.

Let us explain.

BACKGROUND

In February 2026, the UAE Central Bank issued Regulation C 2/2026 - the SME Customer Protection Regulation - replacing the 2021 SME Market Conduct Regulation. It comes into force on 13 September 2026.

This does not come as a surprise.

When you look at the role of the UAE Central Bank is playing in modernizing the UAE financial system – and when you look at the numbers – the direction is clear.

SMEs are the backbone of the UAE economy:

• 557,000 SMEs operating in the UAE as of mid-2022

• 63.5% contribution to non-oil GDP

• A national target of 1 million SMEs by 2030

The UAE government places enormous importance on SMEs as a driver economic diversification and the UAE Central Bank is now making sure the financial sector treats them accordingly.

As the CBUAE itself states in the regulation: "The Central Bank is seeking to establish a framework for protection of SMEs as Customers and enhance their access to Financial Products and Services in the UAE."

This is not just rule-making. It is the CBUAE reshaping the relationship between financial institutions and the SME backbone of this economy.

BIGGER PICTURE

This regulation flows directly from Federal Decree-Law No. 6 of 2025 - the new Central Bank Law - that repeals the 2018 framework and ushers in a significantly expanded regulatory architecture covering virtual assets, open finance, payment systems, and financial market infrastructures.

KEY CHANGES

Here are some of the key changes every bank and finance company needs to know:

• Broader customer base - sole proprietors are now explicitly included as protected customers. If your products reach them, reach out to chat.

• Governance framework - the Board is ultimately responsible for ensuring fair treatment of SME customers at every stage of the relationship. This is board-level accountability. We have provided board governance support and board secretarial services to one of the major acquirers in the region. We would be glad to share that perspective and discuss what structured board governance looks like in practice under this framework.

• Disclosure & transparency - enhanced obligations across all channels: branches, apps, internet banking, ATMs. No channel is exempt.

• Key Facts Statement (KFS) – who doesn’t appreciate a simple and well structured KFS document? It is a mandatory document, and we can help design KFS templates that are compliant, clear and actually useful to your customers.

• Notice periods – a minimum 60 calendar days' written notice before any change to terms or fees. 30 days before automatic contract renewals.

and many more …

IS IT ONLY FOR EXISTING BANKS AND FINANCIAL INSTITUTIONS?

No - and this point is often missed.

If you are in the process of obtaining a banking or finance company licence from the CBUAE - and your business model targets SMEs or sole proprietors - C 2/2026 is part of your compliance framework from day one. Build it in early.

LET’S TALK

Whether you are an established bank reviewing your SME framework, a finance company assessing your product suite, or a prospective licensee building your compliance architecture from the ground up - we would love to have that conversation where you take us through your business model and we tell you how we can support you in navigating what comes next.

By 13 September 2026, you must comply. You know how to find us. Let's talk. Please contact our Head of FinTech Jouhayna Amr jouhayna@thebenchlaw.com or your normal contact at The Bench.