Shariah-compliant financial products first appeared on the UK market in early 1990s when the first Islamic mortgages were launched. These early products were not very competitive in features and pricing, so growth remained modest throughout the 1990s and early 2000s.

The last five years have seen significant development as more providers have entered the market. The range of products now offered has become more comprehensive and products have become more sophisticated and competitive.

Currently, there are around 10 regulated financial institutions that provide some type of Islamic financial product. This significant increase in the number of Islamic finance providers indicates a growing demand for Halal financial products.

There are currently two types of Islamic financial providers in the UK:

• Conventional banks which provide different types of Islamic products
• Islamic banks

Until 2004, only conventional banks provided Islamic financial products in the UK. The first stand-alone Islamic retail bank was authorised by the Financial Services Authority (FSA) in August 2004, followed by two more Islamic investment banks. The FSA, as the UK’s financial services regulatory body, has committed itself to combating financial exclusion. Robust measures have been taken to remove any barriers that result in the unwillingness of households to access banking and other financial services because of distance, poverty or religion.

The UK government also has a strong aspiration to make London the global gateway for Islamic finance. A level playing field is being encouraged by legislative changes made to accommodate the specific needs of Islamic financial products. These measures are increasingly giving UK Muslims an equal opportunity to access finance in compliance with their faith.

The development of Takaful “Islamic insurance” products is deemed to be another major step towards providing UK consumers with a better and bigger choice of Islamic and ethical financial products.

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