Press Releases

UKIFC and CMS join forces to drive growth in Islamic finance industry

The Islamic Finance Council UK (‘UKIFC’) and international law firm CMS today announce an innovative partnership to help develop, support and optimise Islamic finance frameworks across the world. The aim is to offer a single, cohesive legal, advisory and capacity building service tailored to help government agencies, regulatory bodies and financial institutions to respond creatively and develop capacity for Islamic finance.

The partnership launches at a time when global Islamic finance assets are expected to rise from $2 trillion in 2015 to $3.5 trillion by 2021 – representing a 12% compound annual growth rate. Islamic banks are likely to be the main driver of this growth, with assets expected to reach $2.7 trillion by 20211.

“With a growing Muslim population, the potential future demand for Islamic finance is huge,” says Shakeel Adli, Head of Islamic Finance at CMS. “By bringing together a unique blend of practitioners who are recognised leaders in the global Islamic finance market, we are able to draw on our collective knowledge and expertise to provide a one-stop shop offering a truly unique and holistic approach to Islamic finance.”

UKIFC and CMS have recognised that the availability and effectiveness of Islamic finance in any given jurisdiction depends on meeting a number of challenges; the two most significant of which are creating robust regulatory frameworks and developing human talent. To effectively engage in Islamic finance, investors, consumers and financial institutions require regulatory clarity. It is also of critical importance that human talent is developed to address the unique challenges which Islamic finance presents.

The UKIFC and CMS partnership will assist jurisdictions to meet these challenges.

“As leaders in our respective fields, we share a commitment to growing the Islamic finance industry,” says Omar Shaikh, Advisory Board Member at UKIFC. “By combining our capabilities, we have created a uniquely comprehensive, best in class Government advisory providing support and guidance for government agencies, regulatory bodies and financial institutions as they look to build their capacity and create enabling legal and regulatory frameworks for Islamic finance.”

The UKIFC was established in 2005 as a specialist advisory and developmental body focused on promoting and enhancing the global Islamic and ethical finance industry. Having contributed substantively to the development of the UK Government’s Islamic finance framework, the UKIFC has been appointed to advise several regulators and government ministries across Africa, Asia and Europe and has developed a proprietary methodology for government policy advisory within a secular context.

CMS meanwhile has extensive experience of successfully delivering Islamic finance regulatory advisory projects in multiple jurisdictions including Kazakhstan and Oman amongst others. Significantly, CMS has a geographic footprint which includes 65 offices spread across 38 jurisdictions. The firm has deep local roots with access to cross-border expertise and strong connections to Governments and associated agency bodies in each of the conventional, Islamic and ethical finance sectors.

“The new partnership between UKIFC and CMS offers a team of passionate and committed Islamic finance experts that genuinely combines legal, finance and capacity building ability that is unlike any other advisory firm,” Omar Shaikh concludes.

1Thomson Reuters State of the Global Islamic Economy 2016/17

UKIFC and ISRA Launch ‘External Shari’ah Audit Report’

A pioneering report calling for an independent audit of Shari’ah compliance in Islamic finance will be launched today at the Global Islamic Economy Summit in Dubai. 

Following consultation with over 35 practitioners across four countries the Islamic Finance Council UK (UKIFC) and International Shari’ah Research Academy for Islamic Finance (ISRA) unveiled the ‘External Shari’ah Audit Report’, which seeks to strengthen Shari’ah assurance and calls for external Shari’ah auditing to be made mandatory in Islamic financial institutions across the globe.

With consumer and regulatory demands increasingly focusing on trust, transparency and accountability corporate governance has become a critical challenge for all financial institutions. In particular, this trend has shone a light on Islamic financial institutions, where in-house boards of scholars effectively self-regulate Shari’ah compliance, raising questions as to whether the current model of governance is fit for purpose.

The report, which reflects recent developments in international policies and regulation, proposes that external Shari’ah audit, requiring Islamic financial institutions to undertake an annual Shari’ah audit by a competent independent party, should become an essential development for the industry to augment the work currently done by Shari’ah boards.

Omar Shaikh, Advisory Board member of UKIFC commented: “Ensuring and maintaining the integrity of the Shari’ah is paramount to sustaining future confidence and growth in the Islamic finance sector. By providing an additional check, external Shari’ah audit will play an important role towards providing reassurance to scholars, financial institutions and customers.”

The report also provides a jurisdictional analysis of current external Shari’ah auditing requirements in Oman and Pakistan, where it has already become mandatory.

Prof. Dr Akram Laldin, Executive Director of ISRA added, “Various initiatives are being taken in different jurisdictions to ensure compliance and maintain the credibility of Islamic finance among stakeholders. External Shariah audit provides additional assurance and it does so with greater independence than others.”

Bahrain looks set to be the next jurisdiction to adopt external Shari’ah audit regulation with the Central Bank of Bahrain recently issuing a consultation paper on their proposals. Dr. Ahmed Abdul Hameed AlShaikh, The Deputy Director of the of Bahrain Institute of Banking & Finance commented, “We strongly believe that the next step in creating robustness in this industry and in safeguarding all relevant stakeholders is an appropriate external Shari’ah audit framework— which many central banks, including the Central Bank of Bahrain, are considering introducing in the near future.”

The report also focuses on implementation issues, providing specific recommendations on the role of central bank Shari’ah boards, requirements for public reporting, qualification of external Shari’ah auditors and the need for a professional body for Shari’ah scholars in Islamic finance.

Yasser S. Dahlawi, CEO of Shariyah Review Bureau concluded, “There is hardly a more important subject in the field of Islamic finance than external Shari’ah audit. As the industry undergoes change, this is the right time to report on something new: a new auditing framework, a new reporting mechanism, and new regulatory mandates. This is because a growing industry needs robust supervision to ensure its positive growth and future progress.”

The e-version of ‘External Shari’ah Audit Report’ can be found at www.ukifc.com and isra.my

For more information contact:

Chris Tait, Islamic Finance Council UK

[email protected]

(Tel) 0044 7931103573 or 0044 7193 6329

Mezbah Uddin Ahmed, ISRA

[email protected]

(Tel) 00603 76514224

About

Islamic Finance Council UK (UKIFC)

The UKIFC is a specialist advisory and development body focused on promoting and enhancing the global Islamic and ethical finance industry. The organisation was launched in 2005 by a group of likeminded professionals who sought to make a contribution to the development of the Islamic finance industry. The UKIFC specialises in four core areas, being:1) Ethical finance – helping to promote better co-ordination and understanding of the shared values between Islamic finance and the broader ethical finance arena; 2) Advisory – specialist capability in advising government agencies, regulatory bodies and financial institutions on creating enabling frameworks for Islamic finance; 3) Executive training – delivering bespoke capacity building programmes aimed at practitioners and regulators focused on commercial issues; and 4) Thought leadership – authoring reports, community education and providing industry comment towards influencing regulation and encouraging the development of the sector based on strong research and insights.

www.ukifc.com

International Shari’ah Research Academy for Islamic Finance (ISRA)

ISRA is an autonomous body set-up under the direction of the Central Bank of Malaysia (Bank Negara Malaysia) to promote applied research in the area of Shari’ah and Islamic finance. ISRA contributes towards strengthening human capital development and provides a platform for greater engagement amongst practitioners, scholars, regulators and academicians via research and dialogue, in both the domestic and international arenas. Through pioneering research and rigorous intellectual dialogue, ISRA aims to promote innovation and dynamism and thus extend the boundaries of Islamic finance.

www.isra.my

Christians and Muslims unite to tackle banking crisis

The Church of Scotland and Islamic Finance Council UK have announced a partnership to create ethical financial services.

The joint venture will draw on how the Christian and Muslim communities have supported ethical finance in the past and examine the practical commercial viability of new models which can tackle inequality and poverty. This pioneering initiative is the first time the Church and Islamic finance have come together to collaborate and will aim to create solutions open to everyone regardless of religious or ethnic background.

This initiative has come into being through a shared belief that existing financial institutions have in recent years lost their social conscience. Following the banking crisis of 2008, further ongoing scandals of mis-selling payment protection and interest rate fixing have raised the question if reforms have worked. We believe this is an exciting opportunity for faith groups to work together on solutions which will benefit the whole of society, regardless of faith or belief.

On announcing the project Rt. Rev Dr Angus Morrison, Moderator of the General Assembly of the Church of Scotland, said: “In 2012 the Church of Scotland’s special commission on the purpose of economic activity identified human flourishing and the protection of the planet for future generations as two of the most critical purposes for financial interaction. Our current system has gone badly wrong, creating massive inequality and the destruction of our shared natural resources by money-making machines overtaking commerce that serves the common good.

“The Christian and Islamic faith traditions share a commitment to economic justice and a call to an equal distribution of the gifts of God. By collaborating and “putting our money where our morals are” we have an opportunity to live out our common values and make a tangible change for those most affected by poverty. Active concern for our communities is an obligation and we look forward to meeting the challenge together.”

The Islamic Finance Council UK (IFC) is inspired by a commitment to developing a fairer, more responsible finance system. It has been recognised globally for its work in promoting shared values and increasing connectivity between ethical and Islamic finance stakeholders across the UK. For more than 5 years the IFC has been leading the debate on ethical finance through a series of events based in Edinburgh.

IFC Advisory Board Member Omar Shaikh said: “In recent years we have developed a strong relationship with the Church of Scotland and this project is a result of that positive engagement and the mutual desire to work collaboratively on a project which brings together the best of our respective faiths. The positive message of faith groups working together presents a beacon of light which we hope can inspire many others across the world.

“Scotland has a proud heritage in ethical finance with the savings bank movement able to trace its origins back to the Rev. Henry Duncan of the Church of Scotland. This model was also used as the blueprint for the early Islamic banking attempts in the 1960s, which makes it particularly poignant that this new initiative in being led in Scotland.”

The project will research, shortlist, test and then establish a viable ethical finance business solution. The consultation and business plan phase is expected to last a year, with the first workshop to take place this May in Edinburgh with theological and financial experts coming to Scotland from as far afield as Nigeria, Malaysia and Bahrain.

Additional Notes

International Islamic Finance 

Worth over $2trn, the Islamic finance sector has witnessed tremendous growth over the past decade. Moving forward a key growth strategy for Islamic financial institutions will be their ability to successfully enter and tap the considerably larger ethical finance arena. Along with the commercial opportunity, by focusing on the inherent convergence in ethical values will increase the appeal of Islamic finance in new global markets and allow an avenue to address the aspirational dissatisfaction growing within the industry as witnessed by key stakeholders raising concerns over excessive synthetic imitation of conventional structures.

Africa and Nigeria specifically is well known for its triple heritage. Often referred to as non-interest finance, Nigeria has been taking a lead in developing this sector to promote financial inclusion. Ex-Governor of the Central Bank of Nigeria, HH Emir Sanusi commented, “One immediate success of this initiative is how it is bringing together faith communities on their common values. This is powerful example that many globally can take from, including us in Nigeria. Well done to the Islamic Finance Council UK and the Church of Scotland for showing their vision, leadership and bravery.”

Islamic finance in Malaysia has taken considerable market share and attracted many Chinese Malays and those not of the Islamic faith. Dr Akram Laldin, CEO of Malaysia based Bank Negara body ISRA commented, “Islamic finance is founded on moral and ethical values and these values are shared by different faiths. This joint venture with the Church demonstrates that people from different faiths can work together on the common ground that we share. Together we can strive for the betterment of humanity.”

Scottish communities show leadership

Minister for Europe and International Development, Humza Yousaf, said: “Ethical finance offers a great opportunity to diversify Scotland’s financial services industry, allowing it to grow and prosper. I’m delighted to see the Islamic Finance Council’s hard work in this field acknowledged by the EFICA. The Scottish Government is committed to creating a more socially responsible and fairer economy in Scotland and is building upon our progress to become a worldwide industry leader in the field.”

Since the issuance to the public, in 2013, of its report on the purpose of economic activity the Church of Scotland has promoted a range of new initiatives including the development of the Churches Mutual Credit Union in partnership with other UK churches and support for WEvolution, a pioneering movement developing Self Reliant Groups and social enterprise in Scotland’s poorest communities.

Rev Sally Foster-Fulton, convener of the Church of Scotland’s Church & Society Council said: “In the Church we don’t just want to talk about how we need to do things differently. We want to demonstrate how we can and are. Working with the Islamic Finance Council UK is an important part of that work. Not only are we trying to build a fairer economy together. We are also building vital friendships and relationships across our faiths. That is also really significant in today’s world where these relationships are so often defined by division.”

Scotland’s leading Sunni Muslim theologian, Shaykh Ryzwan commented, “Today marks the beginning of extensive consultation between Muslim faith representatives headed by IFC and its associates and the Church of Scotland on working towards a shared principles framework distilled from the intellectual legacy of the two great faith traditions that will inform the debate on ethical and sustainable models of economy. As the financial crisis of the last decade is being pushed firmly to the back of the collective memory, the systemic non-sustainability of the current financial model further amplifies the need to highlight alternative practice that places human nurturing and the environment at the core of deliberation on what economy should be.

In doing so, it also engages those that question the relevance of religion in the creation of the common good, and provides a new model of Interfaith engagement – moving from dialogue to action. The Scottish context of this initiative, with its unique history in the development of the Enlightenment, in ethical banking as well as its pioneering ecumenical work, serves as the perfect environment in which to embark on this journey.”

UK leading innovation as a global financial hub

Prime Minister David Cameron has stated the UK’s position as a center for Islamic finance.  As the first Western government to issue a sovereign sukuk, today’s pioneering development of interfaith collaboration showcases the UK’s ability to innovation and contribute to the global Islamic finance sector.

Lord Sheikh, Patron of the Islamic Finance Council UK and Co-Chair of the All-Party Parliamentary Group on Islamic Finance and Diversity in Financial Markets, said, “The UK has successful positioned itself as the leading Western Hub for Islamic finance with over £20bn in shariah-compliant assets. This pioneering retail focused initiative presents a great opportunity to build not only a robust sustainable business but also demonstrates British communities working together building stronger, interdependent communities.”

For more information contact:

Chris Tait, Islamic Finance Council UK

[email protected]

(m) 07931103573

Rob Flett, Communications Manager, Church of Scotland
[email protected]

(m) 07764 335793

About the Islamic Finance Council UK

The Islamic Finance Council UK (IFC) is a specialist advisory and development body established to promote and enhance the global Islamic and ethical finance industry. Operating since 2005, the IFC Executive Board brings together a unique blend of seasoned practitioners who are recognised leaders in the Islamic finance market and have worked for leading global institutions. The Council has successfully pioneered a number of unique developmental and educational programmes.

www.ukifc.com

About the Church of Scotland 

The Church of Scotland is Scotland’s national church and is also one of the UK’s largest charities. It serves almost 400,000 members, with more regularly involved in local congregations and our community work. Within the organisation, the Church has around 800 ministers serving in parishes and chaplaincies, supported by professional and administrative staff. The Church has a proud tradition of working to benefit those less well off in society, and campaigns on a range of economic and social welfare issues.

www.churchofscotland.org.uk

END.

Scottish Ethical Finance Hub launches at Heriot-Watt University 

An ethical finance hub will be announced tonight at Heriot-Watt University’s Edinburgh campus, establishing Scotland as a leader in this field. The Scottish Ethical Finance Hub (SEFH), which has received backing from the Scottish Government as well as leaders in the financial sector, will be based at Heriot-Watt University and become a centre for the promotion and development of ethical finance practice.

The SEFH concept has emerged from a series of roundtables held over five years, initiated by the Islamic Finance Council UK (UKIFC). Participants have represented a broad range of sectors including banking, asset management, faith groups, academia, government and the third sector.

Dr Robbie Mochrie, Associate Professor of Economics at Heriot-Watt University and a member of the SEFH steering group, added: “Since the crash in 2008, there has been a growing international demand for more ethical financial practices, whether that’s developing rules that people can sign up to, or principles and behaviours that are considered ethical.

“In hosting the Hub’s initial development, Heriot-Watt University can be a critical friend of the financial services sector. Our academics have expert knowledge of how the various markets and practices work, but don’t directly work in them. We’re able to question and hopefully point the way towards more ethical practice.”

Graham Burnside, consultant at Shepherd and Wedderburn LLP and Chairman of the SEFH steering group said: “In the coming months we’ll be focusing on what ethical finance in Scotland can and should involve, and how we can link in with international markets.

“Ethical finance is a rapidly growing segment of the financial services sector and there’s huge opportunity for Scotland to build on its distinguished heritage. The Hub can be an excellent channel to further this agenda and promote Scotland as a key global centre in this developing field.”

Deputy First Minister and Cabinet Secretary for Finance, Constitution and the Economy John Swinney MSP said

“The Scottish Ethical Finance Hub will see the Islamic Finance Council work with Heriot Watt University to develop a model that has the potential to make a real impact internationally.

“I’m pleased to say the Scottish Government is supporting this project with up to £50,000 of funding, which will allow Scotland to capitalise on the increased global profile of ethical finance and progress towards becoming a worldwide industry leader in the field.”

The SEFH will begin its residency at Heriot-Watt University on Thursday 29 October with a discussion on how businesses can build a more sustainable world through ethical finance, focusing on existing challenges and potential solutions. As well as Dr Robbie Mochrie speakers will include Omar Shaikh, advisory board member of the UKIFC and Ryan Smith, head of corporate governance and SRI at Kames Capital, an investment management firm.

Scotland’s reputation within the ethical finance sector has had a series of recent boons. In September 2015, over 250 finance and investment professionals from across the globe came to Edinburgh for the inaugural Global Ethical Finance Forum. This was quickly followed by the UKIFC winning the prestigious Industry Development Award at the Ethical Finance Challenge and Innovation Awards in Dubai.

ENDS

Media contact: For Heriot-Watt enquiries, please contact Sarah McDaid, Pagoda PR (0131 556 770/ [email protected] )

FOR SEFH enquiries, please contact Chris Tait [email protected] Tel: 07931103573

Notes to editor 

About SEFH 

The SEFH concept can be framed in the context of a rapidly developing and varied global ethical finance industry, including:

  • Retail finance – UK retail banks are currently exploring how to embrace ethical practice to restore their reputations; speciality banks, such as Triodos and Charity Bank, are developing their niche; and credit unions offer a path to community-based retail banking.
  • Funds management – asset managers responding to client demand for investment activities under labels such as ethicalresponsible, or sustainable. UK government policy seems likely to increase the role of social investment vehicles in the provision of public goods.
  • Islamic finance – an area in which London has played a prominent global role, and which might be a source of foreign direct investment, infrastructure finance, funds for asset management and new entry into retail markets.
  • Academia – working in partnership with Scottish HEIs, the Hub will bring together research capacity and the provision of executive training in the ethical finance sector including contemporary trends in SRI, ESG and social impact investing.