Tim, I have decided to move on from Dubai and when speaking to my bank with regard to my impending move, I have come under all kinds of stress in relation to closing my account and all the associated services. Is this just me or is it a common phenomenon at present? Sean
Read on for the answer.
Sean, what you are experiencing is a true reflection on what is happening in most of the other banks in the United Arab Emirates. Historically, in the days of easy credit, the banks suffered as a result of providing credit facilities without a great amount of due diligence. As a result, criteria is now tightened and in many instances the costs involved have increased. Ironically, those of us who have credit cards for their proper intended usage are in effect penalized by those who do not.
In an effort to preclude the abuse of credit cards, many banks have added further stipulations to control the risk of default. Presently, in the absence of a sophisticated, multi jurisdictional credit reference agency and the transient nature of many bank customers, there is clearly a need for a tighter rein on all levels of credit both secured and unsecured. Without any tangible reference agency in place, defaulters can create debts in one bank/location and without too much difficulty carry out the same process again. Trying to prevent this is difficult at best and there are few weapons in the banks arsenal to bring these miscreants to justice.
In the United Arab Emirates, the manner in which cheques are treated is not dissimilar to cash. Therefore, if you bounce a cheque it is considered as theft and as such it is very easy to create a clearly defined complaint against the offender. Once a bounced cheque is presented to the Police, a criminal case is created and if you are not prompt in resolving the situation, it is likely you will end up in jail. And here lies the rub …
Many Banks are seeking security cheques as an ultimate back stop to their lending criteria; for both secured and unsecured loans. So if you have done the right thing and told your bank that you are moving on, unless there is sufficient funds to meet your outstanding liabilities, they could freeze the account altogether.
It is important to let them know your intentions and remember that you can continue to retain secured debt (mortgages) once you leave the country. However, be very aware that if you default on your mortgage, there is no clearly defined process for the bank to repossess your property should it ever come to that. In order to recoup their monies, it is simpler for them to present a cheque for the outstanding amount of the loan. This firmly puts the ball back in your court when faced with the prospect of a custodial sentence.