ACCA is the global body for professional accountants, with 325,606 students and 122,426 members in 170 countries worldwide. A recent ACCA paper – Islamic Finance : An Ethical Alternative to Conventional Finance ? – explores the basic tenets of Islamic finance, the role of the UK in leading its development and whether it is a serious alternative to conventional finance.
Once seen as a marginal industry by some, Islamic finance is now recognised as a vital and thriving market. It has been widely acclaimed as the fastest growing sector within the world of finance and positions itself as an alternative model. Some suggest much of the current problems might have been avoided in an Islamic system (for example, because short selling and derivatives are generally prohibited). Advocates of this view point to the fact that funds adhering to Islamic (Shari’ah) investment principles have so far avoided the worst effects of the credit crisis.
ACCA has the most diverse student and member base amongst the world’s accountancy bodies, thousands of whom live in countries with a thriving Islamic finance market in the Middle East, Malaysia and Pakistan. This is why ACCA is keen to play its part in increasing the understanding and development of this sector.
- Richard Aitken-Davies is the President of The Association of Chartered Certified Accountants ACCA. Among the main points he emphazises on regarding the Islamic finance sector :
- the need to raise awareness of the principles of Islamic finance, with particular emphasis on the embedded principles of ethics and social responsibility
- further development of Islamic finance will require a wider range of products to stimulate competition and provide the best service to the public
- while it is not possible for UK regulation to distinguish Islamic finance from other forms of banking on a non-secular basis, there is a need to ensure a level playing field as far as possible
- however, Islamic banks are not a panacea – they are increasingly beginning to feel the effects of the slowdown, due to the interconnection with the global financial system.