Towards a Plural Financial System
Edited by Valentino Cattelan
Chapter 11: Regulating Islamic financial institutions in the UK
Islamic financial transactions have been conducted in the UK since the early 1980s, but since 2003 the government has actively pursued the consolidation of an Islamic financial centre in the City of London. This chapter addresses the manner in which the legislative facilitation of Islamic financial transactions in English law has proceeded and considers the effects of UK financial services law on the operation of Islamic banking and finance. Specifically, the chapter situates the pluralistic interaction of the law of Islamic finance with English law, UK financial services law and the increasing influx of European Union (EU) financial market directives. First, the background of Islamic finance in the UK as well as the government’s policy objectives for the industry are examined. Next, the inclusion of the Shari‘ah in English law and its connection to the legislative and regulatory approach to facilitating Islamic financial transactions is considered. Finally, the legislative implementation of several pivotal Islamic commercial contracts, an analysis of the impact of UK financial services law on the operations of Islamic banks and a discussion of the government’s role towards Shari‘ah supervisory committees are given consideration.
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