Sharia-compliant banking products a ‘huge flop’ in Britain

Posted on June 21, 2010 by creeping 

Hold back the tears, even when sharia fails in the open market, it creeps into government policy, via Sharia-compliant banking products a ‘huge flop’ in Britain | The Australian.

ISLAMIC bank accounts and other financial products have failed to take off in Britain, according to industry insiders.

This is despite hopes that the UK would become a pioneer in a new growth market.

New banks that were set up to appeal to the UK’s nearly two million Muslims and Sharia-compliant products created by the existing high street lenders have failed to make much of an impact, critics say.

Junaid Bhatti, part of the team that set up Islamic Bank of Britain, the first Sharia-compliant bank approved by the Financial Services Authority, says that the sector has been a big disappointment.

“As we now approach the sixth anniversary of IBB’s launch, I’m sad to finally have to admit that Islamic finance in the UK has been a huge flop,” he said. “IBB may still be limping on as probably the last bastion of the cause, but it’s difficult to imagine it holding out for much longer.”

Competitors have fared even worse and many had closed or scaled back their operations significantly, Mr Bhatti said.

However, there could be some improvement with legislative changes designed to make it easier for banks to offer Islamic products, which should reduce their price.

The Treasury has made changes in the tax law to accommodate Sharia products, Mr Qayyum said, and the FSA is consulting on a new framework for the issuance and regulation of sukuk, or Islamic bonds.