UK: Government launches consultation on Islamic finance in the UK

The Government has launched a consultation on the legal implications of regulating Islamic finance in the UK.

The joint Treasury – Financial Services Authority (FAS) consultation will set out the proposed legislative framework for regulation of an alternative financial instrument commonly known as an Islamic bond, or sukuk, which is interest-free and asset-backed.

Ian Pearson MP, Economic Secretary to the Treasury, launched the consultation as part of the government’s work to support the growth of Islamic finance in the UK.

“We value the contribution Islamic finance makes to London’s position as an international financial centre and we want to see this sector continue to grow and prosper in this country,” he added.

Islamic finance is a growing market in the UK. Lloyds TSB, Royal Bank of Scotland, and HSBC all offer Sharia compliant products. The Islamic Bank of Britain – Britain’s first stand-alone, Sharia compliant, retail bank, opened in 2004 – recently reported an increase in the number of non-Muslim customers since the start of the credit crunch. The Islamic mortgage market has grown to over half a billion pounds since 2003.

However, Chancellor Alistair Darling said last month that in light of the current economic situation the Government would not be releasing the country's first sovereign sukuk.

The Economic Secretary also spoke of the government’s commitment to equal opportunity and access to financial services: “The Government wants to ensure no one in the UK is denied access to good financial services on account of their religious beliefs.”

Increasing the availability of Islamic finance will also ensure that Muslim communities in Britain have equal access to business opportunities, according to a Treasury statement.

Today’s launch coincided with the publication of a government paper Islamic finance, The development of Islamic finance in the UK: the Government's perspective, which aims to raise public awareness of sharia-compliant finance.

(Europe News)
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