Over the last three years increasing efforts have been made to give British Muslims better access to the financial services and products used by other UK residents.
Muslims have previously been forced to choose between the benefits of modern financial products and keeping true to Islamic, or Shariah, law. <br
Under these rules both paying and receiving interest (riba) is barred, as is investing in any company that is not Halal – for example those that make money from gambling or alcohol.
However, today HSBC announced that it would be offering buildings and contents insurance specifically designed to meet the requirements of the Shariah, while Lloyds TSB said branches in Newcastle, Preston, Sheffield, Bastwell and Sparkhill in Birmingham will begin to offer current accounts and home finance also designed to meet the requirements laid down by the Muslim faith.
In the last two years an increasingly large number of products and providers have moved to offer assistance to those looking to make the most of their money but not at the expense of their religion.
In the last two years Shariah compliant ‘mortgages’, current accounts, pensions, and even child trust funds have been launched. But today’s announcements by two of the UK’s largest personal finance providers will come as welcome news.
“This is yet another milestone on the road to making Islamic banking available to all Muslims in the UK. There is now a real choice on the high street for Muslims who want an alternative to conventional current accounts and mortgages and we’re proud to be able to give these customers something we know that they will value,” said Paul Sherrin, head of Lloyds TSB Islamic Financial Services.
“We’re offering products which not only meet the needs of Muslims, but are also truly competitive. The fact we’re expanding the pilot is testament to the popularity of our Islamic financial services so far.”
Amjid Ali, UK head of HSBC Amanah range of products, added: “There are over 1.6 million Muslims in Britain, of which 250,000 are homeowners, but until now they had no easy way of arranging insurance that complies with the Shariah. HSBC’s Home Takaful policy is the first of its kind to be nationally available and I am confident that the ethical nature of the Takaful system and its attributes of fairness will have broad appeal.”
Takaful insurance has, until now, only been readily available outside Western Europe.
It is built on the principal of mutual co-operation, similar to the first UK friendly societies.
In this way participants (policyholders) donate their contributions (premiums) into a collective fund (Takaful fund), and jointly share the risk for their mutual benefit