Recent years have seen the UK government pay much attention to islamic finance and everything to do with it. Great Britain was the first jurisdiction to host a self-contained islamic financial establishment in the EU. In 2013 the UK created IFTF, an organization whose main goal was to make Great Britain the number one destination for islamic finance.
Planning on registering a company in the UK? This article will provide you with some valuable insights into how regulation of islamic financial markets in Great Britain is done.
Legal Aspects of Islamic Financing in Great Britain
What British regulators tried to do was create a most conducive environment for islamic financing and traditional instruments. In particular, they tracked down instances of unfair treatment of this kind of financing and made changes to respective legislation. They also did away with sukuk being unfairly treated by ensuring no debt instruments have any specific privileges.
Looking to establish a company in Great Britain? If you are, then you should be mindful of the fact that this jurisdiction does not yet have any legislative framework regulating islamic financing.
Registration of islamic banking activities in Great Britain is done as per the FSMA. The same law applies to financial instruments markets and insurance. To create a most conducive environment for islamic financing in Great Britain, the British government introduced certain vital changes to current legislation.
The said changes aimed at governing islamic financing in Great Britain included:
- cancellation of SDLT on hypothecary loans regulated by Islamic law
- amendments in tax legislation to ensure its compliance with Islamic law
- extension of AFA regimen to sukuk
As of 2013. the PRA and FCA have been charged with regulating the banking sector in Great Britain, financial instruments markets and insurance-related products.
There is no centralized body in Great Britain charged with ensuring that are all financial deals or instruments are compliant with Islamic law. The UK does not require islamic financial establishments to put in place SSCs either.
Applying for a License Authorizing Business Activities in Great Britain
The main law regulating the banking sector in Great Britain is the FSMA.
Similar to conventional banking establishments, the FCA exercises control over islamic banking establishments, whereas the PRA enforces supervision regarding prudential demands.
Thinking about starting a business in Great Britain? If you are, then you’ll need to apply for a banking license in Great Britain. Foreign banking establishments can provide islamic banking and financial products in Great Britain only if the are compliant with applicable legislation.
Foreign nationals involved in takaful are allowed to sell their products in Great Britain if they abide by existing legislation (which includes the FSMA).
They are under no specific obligation to divulge info pertaining to their activities.
Islamic Law in Great Britain
Islamic law is not applicable in Great Britain. UK legislation does not recognize Islamic law as a legal system which is apable of resolving disputes in Great Britain.
Legal advice on regulating financical activities in Great Britain
Still looking for information on islamic financing? Contact IQ Decision UK and get exhaustive information about it! Our lawyers will help you register a company in Great Britain, as well as apply for a license authorizing financial activities in Great Britain.