How VARA-Licensed Firms Should Manage Customer Complaints in Dubai

Why Is Customer Complaint Management Important for VARA-Licensed Firms?

Customer complaint management is important because it helps VARA-licensed firms demonstrate fair customer treatment, operational accountability, and effective compliance oversight. A structured process allows businesses to address individual concerns while identifying weaknesses that may affect other customers, products, or services.

For a virtual asset business, complaints can arise from different operational activities, including:

• Delays in virtual asset withdrawals or transfers.
• Disputed transactions or account balances.
• Unexpected trading or service charges.
• Customer onboarding and verification difficulties.
• Delays in responding to customer requests.
• Incorrect or unclear information about products.
• Technology failures affecting customer transactions.
• Problems involving external service providers.

A complaint that appears minor at first may indicate a wider operational issue.

For example, several customers reporting withdrawal delays could suggest a recurring system problem rather than unrelated service incidents.

In practice, firms should treat complaint information as a source of operational and compliance insight, not simply as customer correspondence that needs a reply.

What Qualifies as a Customer Complaint Under VARA?

A customer complaint is not necessarily limited to a formal written submission. VARA-licensed firms need procedures defining when a complaint is considered to have been made and which communication channels are monitored. Customer dissatisfaction may require formal handling even when the customer does not specifically use the word "complaint."

This distinction matters because customers communicate problems in different ways.

A client may contact support through email, an application, a telephone conversation, or an online service channel. Depending on the circumstances, the communication may represent a complaint requiring investigation.

Example 1:

A fictional Dubai-based virtual asset exchange receives repeated support messages from a customer whose withdrawal requests remain pending. The customer initially asks for assistance but later expresses dissatisfaction with the delays and the explanations received.

Although the customer never submits an official complaint form, the communication may qualify as a complaint under the firm's established procedures.

The business should assess the communication promptly, record the relevant complaint date, and begin the appropriate handling process.

This illustrates why employee training is essential. Customer-support teams should understand when an ordinary service request becomes a matter requiring formal complaint management.

What Are VARA's Customer Complaint Handling Deadlines?

VARA's complaint-handling requirements establish specific time limits for licensed VASPs. Firms must acknowledge customer complaints within one week and normally resolve them within four weeks. Where extraordinary circumstances prevent resolution, customers must receive an appropriate update within four weeks, with final resolution required no later than eight weeks.

Complaint Acknowledgment Within One Week

A VARA-licensed firm must acknowledge a complaint within one week of it being made.

The acknowledgment should confirm receipt and provide the customer with a clear understanding of the next steps.

A practical acknowledgment may include:

• Confirmation that the complaint has been received.
• A complaint reference number.
• The relevant department or contact point.
• A brief explanation of the investigation process.
• Information about expected communication.

Firms should avoid promising a particular outcome before completing the investigation.

Normal Complaint Resolution Within Four Weeks

Complaints must ordinarily be resolved within four weeks of being made.

The investigation should establish the relevant facts, consider the available evidence, and determine an appropriate outcome.

Businesses should not automatically use the full four-week period where a complaint can reasonably be resolved earlier.

Internal deadlines may be shorter than the regulatory maximum to allow sufficient time for review and escalation.

Extraordinary Circumstances and the Eight-Week Limit

Where extraordinary circumstances prevent resolution within four weeks, the firm must inform the customer of the complaint's status and explain the reason for the delay within that four-week period.

The complaint must then be resolved no later than eight weeks after it was made.

An unresolved complaint should not remain open without documented investigation, communication, and management oversight.

A centralized tracking system can help businesses monitor these deadlines consistently.

How Should VARA-Licensed Firms Receive Customer Complaints?

VARA-licensed firms should provide accessible complaint-submission arrangements and clear instructions for customers. Although businesses must make an easy-to-use complaint template available, they must not recognize complaints only when submitted through one particular form or channel. The process should accommodate relevant customer communications across monitored channels.

Depending on the firm's operating model, complaint channels may include:

• Dedicated customer-support email addresses.
• Online complaint submission forms.
• Customer-service portals.
• In-application support functions.
• Telephone support channels.
• Other communication channels recognized by the firm.

VASPs must not impose charges for submitting or handling customer complaints.

The firm should also ensure that complaint channels lead into a coordinated internal process.

When complaints remain scattered across individual employee inboxes or support systems, businesses may struggle to identify unresolved cases and meet deadlines.

What Is the Recommended Complaint Management Process for VASPs?

An effective complaint management process should follow a clear sequence from initial receipt through investigation, resolution, and review. Each stage needs an assigned responsibility, documented action, and appropriate oversight. The objective is to ensure complaints are handled consistently rather than differently depending on the employee or department involved.

Step 1: Identify and Register the Complaint

Once a communication is classified as a complaint, it should be entered into a central complaint register.

Useful information includes:

• Date and time the complaint was made.
• Customer identification or account reference.
• Complaint category and description.
• Relevant virtual asset service.
• Communication channel.
• Assigned investigator.
• Acknowledgment and resolution deadlines.
• Current status and escalation requirements.

A central register helps compliance teams identify overdue complaints and recurring issues.

Step 2: Acknowledge and Assess the Complaint

The firm should acknowledge the complaint within the required period and assess its seriousness.

Complaints involving potential customer asset losses, security incidents, significant transaction errors, or repeated operational failures may require immediate escalation.

The initial assessment should determine which departments need to participate in the investigation.

Step 3: Conduct an Objective Investigation

The investigation should establish what happened, why it happened, and whether corrective action is required.

Relevant evidence may include transaction records, customer communications, system activity logs, account documentation, internal approvals, and third-party correspondence.

Employees directly involved in the matter should not be responsible for independently investigating their own actions.

Step 4: Determine and Communicate the Outcome

After reviewing the evidence, the firm should document its findings and communicate the resolution to the customer.

The communication should explain the outcome in understandable language.

Where corrective action is necessary, the firm should clearly record what has been approved and implemented.

Step 5: Review the Underlying Cause

The final stage involves assessing whether the complaint reveals a wider weakness.

A customer refund, transaction correction, or service response may resolve an individual case without correcting the underlying operational problem.

Compliance and risk teams should therefore review complaint trends and monitor relevant corrective actions.

Who Should Investigate Customer Complaints?

Customer complaints should be investigated by employees who are not directly involved in the subject matter of the complaint. This separation supports objectivity and helps reduce conflicts of interest. Depending on the issue, investigation responsibility may sit with compliance, operations, risk management, or another appropriately independent function.

For instance, a complaint concerning a trading operations employee should not be investigated solely by that same employee.

A firm should establish escalation arrangements for matters involving potential misconduct, customer asset risks, or significant control failures.

A complaint process becomes more effective when management measures not only how quickly cases close, but also whether the underlying problems are being corrected. — Consulting Journal editorial observation

Independent review is particularly relevant when complaints involve complex transactions, internal conduct, or disputes between the customer and the firm's operational teams.

Who Is Responsible When a Third-Party Provider Causes a Complaint?

A VARA-licensed VASP remains responsible for resolving customer complaints even when a third-party service provider is involved. Businesses should maintain procedures that allow them to obtain information from external providers, investigate the customer's concern, and meet the applicable complaint-handling deadlines.

Virtual asset firms may work with:

• Custodians and wallet infrastructure providers.
• Payment service providers.
• Technology vendors.
• Liquidity providers.
• Banking partners.
• External operational support providers.

Example 2:

A fictional Dubai VASP receives a complaint regarding a delayed transfer involving an external technology provider.

The provider explains that a technical issue requires additional investigation. However, the VASP cannot simply direct the customer to the vendor and close its own case.

The licensed firm should coordinate with the provider, investigate the issue, communicate with the customer, and work toward resolution within the applicable timeframe.

Businesses should therefore consider complaint-response obligations when reviewing outsourcing agreements and third-party service arrangements.

How Long Must VARA-Licensed Firms Keep Complaint Records?

VARA-licensed firms must retain appropriate documentation relating to customer complaints, investigations, responses, and resolutions. Relevant books-and-records requirements generally establish a minimum retention period of eight years, while certain records connected with UAE national security may be subject to indefinite retention requirements.

Complaint records may include:

• Original customer communications.
• Complaint acknowledgment records.
• Internal investigation reports.
• Transaction and account evidence.
• Relevant employee communications.
• Third-party investigation correspondence.
• Final decisions and customer responses.
• Corrective actions and closure documentation.

Businesses should maintain records in a manner that supports retrieval, review, and regulatory inspection.

The objective is not simply to preserve documents. The complaint file should demonstrate how the firm reached its decision and what action followed.

How Should VASPs Address Repeated Customer Complaints?

Repeated complaints should be investigated for potential common causes rather than handled only as separate customer-service cases. VARA expects firms to take reasonable steps to identify recurring or systemic problems, consider whether similar issues may affect other customers or services, and correct the underlying causes.

Consider a virtual asset platform receiving repeated complaints about incorrect transaction-fee calculations.

Resolving each customer's fee dispute individually may not address the underlying issue.

The firm should assess whether the problem originates from its pricing configuration, technology systems, disclosure process, or internal controls.

Management reporting can help identify:

• Frequently recurring complaint categories.
• Products generating repeated customer dissatisfaction.
• Complaints exceeding internal resolution targets.
• Cases reopened after initial closure.
• Operational failures involving the same provider.
• Corrective actions that remain incomplete.

Complaint trend analysis can provide useful information for compliance reviews, internal audits, and operational risk assessments.

What Common Complaint-Handling Mistakes Should VASPs Avoid?

Complaint management weaknesses often arise when firms rely on informal support practices rather than documented procedures. Missing deadlines, incomplete records, unclear investigation responsibilities, and poor third-party coordination can create avoidable compliance exposure.

Common mistakes include:

• Recognizing complaints only when an official form is submitted.
• Failing to record the date a complaint was originally made.
• Allowing cases to remain in personal employee inboxes.
• Missing acknowledgment or resolution deadlines.
• Assigning investigations to employees directly involved in the complaint.
• Failing to explain delays to customers.
• Assuming external providers are responsible for customer resolution.
• Closing complaints without documenting the investigation.
• Ignoring repeated problems affecting multiple customers.
• Publishing complaint procedures that do not reflect actual practices.

An effective compliance framework should address these issues through written procedures, employee training, management oversight, and periodic testing.

What Documents and Controls Should Firms Prepare?

VARA-licensed firms should maintain practical documentation that supports the entire complaint-handling process. The precise arrangements will depend on the firm's licensed activities, operating structure, technology systems, and customer-service model.

A useful preparation checklist includes:

• Documented customer complaint management policy.
• Customer-facing complaint submission instructions.
• Accessible complaint template.
• Centralized complaint register.
• Defined acknowledgment and resolution deadlines.
• Internal investigation and escalation procedures.
• Independent complaint-review responsibilities.
• Third-party complaint coordination arrangements.
• Customer acknowledgment and resolution templates.
• Complaint documentation and retention procedures.
• Root-cause analysis and corrective-action records.
• Complaint management reports for senior management.
• Staff training and compliance monitoring records.

Businesses should periodically assess whether their documented procedures match their actual operational practices.

How Can KPM Global Services UAE Assist Virtual Asset Businesses?

Virtual asset businesses may require support connecting regulatory expectations with practical internal controls. KPM Global Services UAE can assist businesses in reviewing compliance documentation, assessing operational procedures, and identifying areas where complaint management arrangements may need improvement, depending on the engagement scope.

Potential areas of assistance include:

• Reviewing complaint-handling policies and internal procedures.
• Assessing complaint documentation and record-management practices.
• Supporting compliance control reviews.
• Identifying gaps in complaint tracking and escalation arrangements.
• Assisting with operational process documentation.
• Supporting internal reporting and compliance readiness assessments.

Businesses should ensure that their complaint-management arrangements are appropriate for their activities, organizational structure, and applicable licence conditions.

Professional assistance can support the design and review of these arrangements, while responsibility for regulatory compliance remains with the licensed business.

What Should VARA-Licensed Firms Prioritize?

VARA-licensed firms should prioritize complaint recognition, deadline monitoring, independent investigation, reliable documentation, and corrective action. These elements support consistent customer treatment while allowing management to identify operational weaknesses before they become recurring compliance concerns.

A written policy alone is not sufficient if employees cannot apply it consistently.

Businesses should evaluate how complaints move between customer support, operations, compliance, external providers, and management.

Periodic reviews should also consider whether published complaint instructions remain accurate and whether all relevant teams understand their responsibilities.

For a Dubai VASP, effective complaint management is ultimately about maintaining a clear, accountable process that protects customers and supports operational discipline.

This article is for informational purposes and does not constitute legal, tax, accounting, or financial advice.