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11 December 2008

Government launches consultation on Islamic finance in the UK

A joint Treasury–FSA consultation on proposals for the legislative framework for the regulation of alternative finance investment bonds, which include sukuk, was launched today by Ian Pearson MP, Economic Secretary to the Treasury. 

Ian Pearson said today:

“This consultation is an important part of the work Government is doing to support the growth of Islamic finance in the UK and to increase our position as a leading global centre in this market.

 “The Government wants to ensure no one in the UK is denied access to good financial services on account of their religious beliefs. 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.”

As well as the consultation launched today the Government has also published a new paper, ‘The development of Islamic finance in the UK’.  This paper’s purpose is to raise awareness of the growing role of Islamic finance in the UK by providing a stock take of achievements to date, as well examining the remaining barriers to growth. 

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Notes for Editors

  1. A copy of the Governments consultation: Consultation on the legislative framework for the regulation of alternative finance investment bonds (sukuk)
  2. This consultation sets out the proposed legislative framework for the regulatory treatment of ‘Alternative Finance Investment Bonds’. AFIBs refer to a type of financial instrument commonly known as sukuk or Islamic bond, but can also refer to any financial instrument with similar characteristics. This consultation paper considers the regulatory policy options for these instruments.  
  3. A copy of the Governments paper on Islamic finance: The development of Islamic finance in the UK: the Government's perspective
  4. Sukuk is an asset-backed, Shariah-compliant trust certificate. The closest instrument comparable in the conventional financial system would be a bond issued in relation to a securitisation.
  5. Increased availability of Islamic Finance products is vital to ensuring the Muslim community in Britain has equal access to business opportunities. Banks such as Lloyds TSB, Royal Bank of Scotland, and HSBC are all offering Shariah compliant products, and London is also the home to a fully Shariah compliant retail bank. 
  6. Since 2003, the Islamic mortgage market has grown to over half a billion pounds.

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