The Financial Services Authority (FSA) has today published a paper setting out its role in the development of the UK as the major European financial centre for Islamic financial products and services.
Worldwide, Islamic finance has grown in recent years at a conservative estimate of 10-15% per annum and is worth about £250bn globally

Bank Negara Malaysia is pleased to announce the execution of a Commodity Murabahah agreement with CIMB Bank Berhad, London on 20 June 2007.  The Commodity Murabahah Programme (CMP) introduced by Bank Negara Malaysia in March this year, is part of the diverse range of policy instruments in managing short-term liquidity in the Malaysian Islamic interbank money market.

Commodity Murabahah is a cash deposit product based on the globally accepted Islamic concept of underlying commodity transactions to facilitate liquidity management and investment. The CMP is a commodity-based transaction that utilizes crude palm oil based contracts as the underlying asset. To date, Bank Negara Malaysia has executed master agreements with eight islamic banking institutions in Malaysia and one in Saudi Arabia.

The global Islamic financial industry stands to benefit from the UK’s development as a more attractive marketplace for Syariah-compliant financing and investment instruments following initiatives announced in the UK budget on March 21.

Standard & Poor’s Rating Services said on March 23 that although Dubai has been the most active trading center for sukuk notes so far, this amendment to the tax law in the UK will make London more attractive for issuing and trading sukuk and provide greater clarity and certainty for investors and issuers.

"We estimate that up to 300,000 retail customers in the UK would be ready customers for Sharia-compliant banking services," said S&P credit analyst Anouar Hassoune in a report entitled -- "World's Islamic Finance Industry To Get A Boost From UK's Development As A Major Marketplace."

Peter Muir, tax partner at Deloitte, said: “Reforms to the taxation of Islamic finance should be applauded. The UK is the only country which is changing legislation to create a level playing field for both individuals and companies investing in Islamic finance products. 

MIKE Ross, the former chief executive of Scottish Widows has teamed up with two other insurance heavyweights to launch an Islamic insurance business backed by Middle Eastern investors.

Together with Dennis Holt, the ex-head of AXA UK, and Peter Nowell, a former director with Alba Life, Ross wants to cash in on a growing market in insurance compliant with Sharia Islamic law. They believe the business has the potential to float on the stock market.

A growing number of lenders are offering Islamic Home Finance

Britain’s two million Muslims can now browse from a selection of home financing options on the high street that comply with Islamic or Sharia law. Banks are never slow to spot a lucrative market and lenders are keen to tailor specialist products to this prospective customer base.

Islamic Finance, Gordon Brown wants UK to be centre for Islamic Investment

He told the Islamic Finance and Trade Conference in London he wanted to make the UK a centre for Islamic investment.

He called for stronger trading links between the UK and Muslim countries as well as global trade reform.

The first UK student current account that complies with Muslim law has been unveiled by Lloyds TSB.

Financial products that comply with Islamic or Sharia law, and are therefore suitable for Muslims, have been offered by major banks in the UK for several years.

However, Lloyds TSB - who along with HSBC have led the way in many areas of Muslim finance - have now become the first to offer a Sharia-compliant student account.