Price of faith for Britain’s Muslims
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Advice to shop around for the best deal rings hollow for Britain’s Muslims who want to save or invest according to traditional Islamic law. From mortgages to Isas, financial institutions do not offer products that meet the strict requirements of Shariah law - placing the banking and investment mainstream out of bounds. Depending on which figures you believe, there are anything between 2m and 3.5m Muslims in Britain. According to research from Datamonitor, it is the second largest religious community after Christians. Many choose not to buy financial products according to religious belief. But for those who do want to, there are large obstacles in their path. Introducing products compliant with Islamic teachings would necessitate changes in UK law, but would also require banks to adjust their accounting and business practices. Some tentative steps are being taken by high street banks such as HSBC, which has an international Shariah-compliant subsidiary, and is in the early stages of assessing the feasibility of offering some products in the UK. The government is also examining the issue. Last month, a working party on Muslim finance put proposals for mortgage reform to Ruth Kelly, treasury financial secretary. The working party included representatives from the Muslim community, the Bank of England and banks such as Barclays and HSBC. It tabled a number of proposals on how changing the law could pave the way for more accessible and competitive mortgages. The Muslim Council of Britain welcomed early indications that the government would take the recommendations on board. But the working party’s initial scope is narrow. “Normal banking products are not yet on the agenda, which means that it is ordinary Muslims who don’t have much choice,” says Aftab Siddiqui, an expert in Islamic financial issues. Mr Siddiqui, who is a member of the working party, says: “There is a whole new generation of professional, high-earning Muslims who are making it known what they want. I think they are largely the reason for the recent heightened awareness of Islamic finance.” Individual interpretations of Shariah law can differ, ranging from people with a strict or literal interpretation, to those who are content to work around it according to their own conscience. Nevertheless, the Islamic teaching that Riba (usury or interest) is Haram (forbidden) is largely accepted as the key guiding tenet of investing and saving. But in a world where financial products either generate interest or charge it, this presents numerous hurdles for Muslims attempting to find anything remotely Shariah compliant. To help with common financial decisions such as taking out a mortgage or how to get involved in the stock market without compromising, Muslims rely on the ongoing interpretations of Shariah scholars. This small, elite group of academics and financial experts assess developments in the financial world and consult with each other and with institutions to arrive at guidelines. “A broad consensus has emerged among scholars as to what is Shariah compliant,” says Dr Hardeep Tamana of stockbrokers, Redmayne Bentley. “It is about realising that in real life companies do borrow, do have debts and that interest is a part of life. “The general thrust is to try to minimise the impact of interest. This can make things like mortgages and even basic bank accounts a difficult prospect because they involve the accumulation of interest and the companies who offer them make interest.” |