UK Government

HM Treasury: Government moves to support UK Islamic finance industry

Press Release   •   Jan 21, 2010 11:17 GMT

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. For further information on the consultation which instructed this legislation, please visit: http://www.hm-treasury.gov.uk/consult_sukuk.htm

Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk

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PN 04/10

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