Non-Muslim & Islamic Banks in UK
Stephen Womack, Mail on Sunday
BRITAIN'S 2m Muslims use Islamic banking so they can manage their financial affairs without compromising the principles of their faith. But it is also finding a growing following among non-Muslims.
Lorna Knight, who is a Christian, has been with the Islamic Bank of Britain since January 2005. Lorna, 46, a supply teacher in a primary school, says: 'I was disillusioned with my previous bank and heard a radio advert for the Islamic Bank.'
She lives near one of the bank's branches in Ladywood, Birmingham, and decided to drop in to find out more. 'I was made to feel very welcome and initially I was won over by the warm customer service,' she says. 'Maybe it is a cultural thing, but I feel I am being treated as a person rather than a number.'
Sultan Choudhury, director of sales for the Islamic Bank, says: 'One in five applicants for some of our products are non-Muslim. They are attracted to the different philosophy behind our services.'
Islamic products follow the teachings of the Koran, which forbids conventional financial speculation and the payment or receipt of interest. However, there is no bar to profit.
Sharia or Halal savings accounts, for example, work by the bank putting investors' money into 'real' commercial transactions such as buying a stake in a company, then sharing rewards with account holders.
Current accounts do not allow overdrafts or pay interest. Customers know that their money is ring-fenced and will not be used to back businesses that are counter to their beliefs.
The Islamic bank's ethical stance struck a chord with Lorna. None of its funds can be used for activities associated with tobacco, alcohol or pornography, for example.
She now has a savings plan running alongside her current account. 'There seems to be an element of respect that underscores the way the bank operates,' she says.
Islamic home finance plans follow the principle of 'diminishing Musharaka' - which means the bank buys a house on your behalf. You then pay rent to the bank each month, plus an extra payment to buy a small share in the property. Gradually, the entire home becomes yours.
Independent Muslim scholars oversee all financial products to ensure that they are operating in line with the religious rules. Lloyds TSB is the latest bank to give Islamic finance a big push. It has introduced an Islamic current account in all its 2,000 branches and an Islamic mortgage in England and Wales.
The bank is also gearing up for an Islamic student current account in time for the start of the academic year.
Paul Sherrin, head of Islamic financial services at Lloyds TSB, says: 'Having spoken to many Muslims, we know that more than three-quarters want current accounts and mortgages that fit with their faith.
'By making these products available nationwide, we're bringing Islamic banking into the mainstream.'
Many other banks are expanding the range of Islamic accounts they sell. HSBC's Islamic home insurance policy is run on a mutual basis, with all customers jointly sharing in the risks and rewards.
The West Bromwich Building Society, meanwhile, has a Sharia-compliant child trust fund account.
When it's the principle that counts . . .
ISLAMIC finance is not the only way you can keep faith with your principles.
It is just one aspect of a growing ethical financial sector that allows you to bank, save and invest in line with your beliefs.
More than £4 billion is now invested in ethical investment funds, which put the shares of companies through a range of ethical tests before considering them for investment.
For example, some funds screen out companies connected with the arms trade. Other funds set positive criteria and try to invest in firms they deem to be doing good, such as healthcare or solar power firms.
Friends Provident was founded by the Quakers in 1832. And though there is no formal link between the two organisations today, some of the founding philosophy has stuck.
The company's Stewardship range of funds, launched in 1984, were the first specialist ethical funds for ordinary savers, and Friends Provident remains a leader in this field.
Mutual Co-Operative Insurance has gone one step further and asked its policyholders which issues most concern them - more than 45,000 responded to its latest questionnaire.
The insurer then tries to use the muscle of the £20 billion of customer funds it manages to influence the behaviour of companies.
Other organisations reflect specific beliefs. The Sons of Temperance Friendly Society, based in Southwark, south-east London, offers savings plans and life insurance only to teetotallers.
Insurer Ansvar targets members of religious congregations, charity workers and regular charitable donors.
The company works through brokers and offers home, motor and travel insurance.
Mail on Sunday, 07August 2006
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