An important feature of the development of London and the UK as the key Western centre for Islamic finance has been supportive government policies intended to broaden the market for Islamic products, for both Sharia-compliant institutions and conventional firms that offer Islamic finance services.
The development of Islamic finance has enjoyed cross-party political support over the past decade. There have been two key policy objectives. Firstly, to establish and maintain London as the leading Western hub for international Islamic finance; and secondly, to ensure that nobody in the UK is denied access to competitively priced financial products on account of their faith. The recently reformed All Party Parliamentary Group, chaired by Naz Shah MP and co-chaired by Lord Sheikh, confirms Parliament’s support for the sector and the growth of Islamic finance in the UK.
The establishment of an enabling fiscal and regulatory framework in the UK for Islamic finance over the past decade has been key to facilitating these policy objectives. Initiatives have included:
* The removal of double tax on Islamic mortgages and the extension of tax relief on Islamic mortgages to companies as well as individuals.
* Reform of arrangements for issues of sukuk so that returns and income payments can be treated ‘as if’ interest. This makes London a more attractive location for issuing and trading sukuk.
* Initiatives by the Financial Conduct Authority (FCA) to ensure that regulatory treatment of Islamic finance is consistent with its statutory objectives and principles.
12th January, 2020