CAIRO - Shying away from financial services that do not conform to their faith, British Muslims are now getting a new service to help them manage their finances in line with Islamic Shari`ah.
Many of the traditional UK financial products involve receipt or payment of interest and as such are considered Haram (unlawful) for Muslims, Shabab Gulfraz, financial consultant with Ummah Financial Planning, told Yorkshire Post on Tuesday, August 14.
When looking at their financial arrangements, Muslims need also to consider how their money is invested and what drives the returns they are receiving.
A new service financial service, called Ummah Financial Planning, has been launched by the accountants and business advisers Garbutt & Elliott in Yorkshire to help Muslims manage their finances in line with Shari`ah.
There are very few specialist intermediaries in this market, said Simon Holt, the managing director of Ummah Financial Planning.
We want Ummah Financial Planning to go national, but initially the business will be based in Yorkshire.
There are between two and three million Muslims in the UK, and around 25 to 30 percent of them live in West Yorkshire.
Holt said the idea came after seeing that many Muslims could be steered away from financial services because of the absence of Shari`ah-compliant financial services.
I worked alongside a Muslim scholar for nearly three years, supporting him in his work to bring more ethical financial products to Muslims in the UK and overseas, Holt said.
During this time, I realized that Muslims need specialist financial advice firms to be established which understand the culture, values and beliefs of the faith.
This is where the idea for Ummah Financial Planning came from.
The new financial service was issued after months of consultations with the Muslim community.
The Ummah team have spent time consulting with the community to seek their advice on how best to engage with Muslims and brought in a specialist Muslim consultant to lead this work for them, said Gulfraz, the financial consultant with Ummah Financial Planning.
Many ISA, PEP, unit trusts and pension funds invest money in a mix of different assets including equities (shares), property, gilts (loans to the Government), corporate bonds (loans to companies) and cash (gilts, corporate bonds and cash are all interest bearing).
Although these funds are professionally managed by teams of investment managers whose aim is to maximize the returns and create profit; they are often Haram (unlawful) for Muslims as they generate some of their profits from interest or investment into un-Islamic activities, he said.
Islam forbids Muslims from usury, receiving or paying interest on loans.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.
Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.
Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.
The launch of the new financial service in Britain was timed to coincide with the holy fasting month of Ramadan.
Throughout this month, Muslims from all countries unite in a period of fasting and spiritual reflection, Gulfraz said.
All Muslims will spend time in this month reflecting on their individual faith and practices and reading from the Qur'an, with the aim of improving and strengthening themselves in accordance with the teachings of Islam.
Ramadan is much more than just not eating and drinking. Muslims are called upon to use this month to re-evaluate their lives in light of Islamic guidance. Towards the end of this blessed month of Ramadan, Muslims are required to pay a fixed portion of their wealth to charity. When calculating the amount to pay, Muslims will take a detailed look at their financial arrangements.
Britain is home to a Muslim minority of nearly 2.5 million.
Britain is the only country in the European Union to have Islamic banks. It is also developing its takaful market for Islamic insurance.It also has a strong foothold in developing products such as commodity murabaha - Islam's version of interbank short-term lending and syndicated loans.