Government moves to support UK Islamic finance industry
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Issued 21 January 2010
The Treasury has introduced measures in Parliament to support Islamic finance
and the issuance of corporate sukuk within the UK.
The Financial Services and Markets Act 2000 Order 2010, will help to provide
a level playing field for corporate sukuk within the UK. The Order provides
clarity on the regulatory treatment of corporate sukuk, reducing the legal costs
for these types of investments and removing unnecessary obstacles to their
issuance.
Sukuk are a broad class of financial instruments designed to replicate the
economic function of bonds, but with a structure which complies with Islamic
principles. Although there is an obvious appeal to the Muslim community, sukuk
can be issued and bought by everyone.
Exchequer Secretary to the Treasury Sarah McCarthy-Fry MP said:
“The Government’s objectives on Islamic finance are to enhance the UK’s
competitiveness in financial services by maintaining the UK’s position as a
Western leader for international Islamic finance; and to ensure that everybody,
irrespective of their religious beliefs, has access to competitively priced
financial products.”
“This measure is another important step in the development of the Islamic
finance sector in the UK and will help to provide a level playing field for
Islamic financial products in this country. It is good news for the UK economy
and for our Islamic finance industry.” Notes for editors
1. In line with the Government’s commitment to support the issuance of
corporate sukuk in the UK, the Government has introduced a number of legislative
changes towards creating a ‘level playing field’ for Islamic financial products.
2. The Financial Services and Markets Act 2000 Order 2010 (Introduced
Tuesday) explicitly exempts alternative finance investment bonds (AFIBs), a
class of debt-like security which includes sukuk, from Collective Investment
Scheme (CIS) regulations. It introduces a unique regulatory definition of an
AFIB, removing uncertainty about the regulatory treatment of corporate sukuk.
3. Further information on the consultation which instructed this legislation
is available on the HM
Treasury website.
© Crown Copyright. Material taken from HM-Treasury.
Reproduced under the terms and conditions of the Click-Use Licence.
