The English Premier League and Islamic Banking May Have More in Common Than We Think!

The English Premier League and Islamic Banking May Have More in Common Than We Think Encouraging Compliance as a Virtue and an Obligation

“Should Islamic Banking & Finance Companies, source service providers who meet some form of ethical or moral code?”

On the 22nd February I attended the last in a series of absolutely excellent lectures at the London School of Economics; this one was titled Global Calls for Economic Justice: the potential of Islamic finance. The general air of anticipation was electric, the attendance exceeded expectations and the organisation and content was exceptional. Speakers were Mr Mukhtar Hussain, CEO of HSBC Malaysia and Professor Volker Nienhaus, visiting Professor at Reading University.

I was sitting next to a very charming Lady from Vietnam who was undertaking Doctoral Research at Southampton University. During the lecture she asked me a very interesting question;

“Surely if all of these organisations operate under such a strict code of practice and with such a keen focus on their moral compass, they should source and use suppliers and service providers who meet a similar criteria or at least comply in some similar way?”

I had no ready response or clever retort. All I could do was agree with her sentiment. Why wouldn’t I? It seems so simple really. If this was the case imagine the impact the whole industry and its related service providers could have on communities.

Imagine if all businesses and organisations within the Islamic Banking & Finance sector were compelled to undertake a certain code. Imagine if all the training and certification providers, all the event organisers, all the magazine publishers, business consultants, technology and systems solutions providers and everyone else who essentially operates within this industry or on the periphery of it and as such profits from it, had to agree to a simple set of virtues and operational protocols?

So I began to think about this scenario and even asked on various social media sites specialising in recruitment what elements, attributes or endeavours would a recruitment company need to develop to appeal on this basis to an Islamic Finance Institution who wanted to work with service providers sharing similar virtues and morals.

There were few answers. No surprise really as people don’t generally like being asked moral questions, the old adage ‘If it isn’t broken don’t fix it’ springs to mind. However, I sat back and I considered the business I work within and what we do.

We have a preferred charity; in fact we have 2 which we donate a % of profits to. This year we didn’t send out thank you cards and pointless gifts to clients in December. Instead we bought a whole bunch of presents, wrapped them all up and donated them to a local Orphanage. We sponsor a young athlete who has great potential and we do volunteer work in the community with the unemployed, one of my colleagues even visited a women’s prison to coach them on how to find work when they were released.

It sounds like I am blowing our trumpet, and I am. When I sat and considered these things, it became apparent that inadvertently we do stand firmly on a moral context and have a positive social impact. Many companies do of course. You look at major football clubs in the Premier League in the UK for example and you don’t see the community schemes they are involved in, such as Arsenal’s support for the Teenage Cancer Trust. Okay so not all footballers and not all football organisations are virtuous or shining examples of how to live your life and be the best person you can. But many of them are, research Didier Drogba, David Beckham, Zinedine Zidane and Lionel Messi and read about what they do. I also appreciate that connecting the principles of Shariah Compliance and the Teachings of Islam to football maybe flippant, please forgive me. But I am trying to reach a broad audience.

None of this is actually that radical, in many ways lots of sectors and organisations operate policies of this sort. In the UK for example Public Sector organisations will and can only work with service providers who comply with ISO 9000 / 9002 to ensure standards and a minimum level of compliance. Supermarkets such as Walmart, Tesco, Carrefour and others will only work with suppliers who meet strict food safety or agricultural policies.

So why is this necessarily so different?

We may not even come close to the kind of compliance and scrutiny undertaken by those truly Shariah Compliant Institutions, but we can at least try.

How much good would be achieved? How much wealth would be shared more appropriately? What could we change positively? How many people’s lives could we impact forever?

I would be interested in any comments that can add to this discussion, elucidate ways in which this kind of idea could be achieved or of course valid points which indicate that this could never work.

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4 thoughts on “The English Premier League and Islamic Banking May Have More in Common Than We Think!

  1. Wayne Andrews

    As far as I know, I’m not sure………….. your neighbour at the LSE lecture had a point, but a lot do try to meet their own standards (so to speak) when choosing suppliers, etc. The trouble is – there is no single code of ethics or Islamic norms that all Islamic institutions abide by. A single governing body that has the ‘yes or no’ casting vote over what is or isn’t Islamic? No – there isn’t one. Scholars who approve or reject financial instruments hardly ever agree – and many of them are on the payrolls of the companies whose products they are vetting.

    More later, when I’ve given it some more thought.

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    1. Darren Ledger Post author

      As always Wayne, considered and experienced comments and opinion. Your points are indeed valid, one of the things I noticed whilst attending those lectures is the huge disparity between the various interpretations from one significant extreme to another.

      Thanks for the input.

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  2. Nadir

    There is no such code for the suppliers of services for traditional banking and finance industry either. Perhaps this has to do with the fact that banking and finance unlike food, healthcare, manufacturing and other industries is not so heavily and strictly regulated (only supervised) as it doesn’t directly affect human health and safety.

    in terms of developing code of conduct for Islamic financial institutions this is not easy either. As it has already been pointed out what body would be developing it and what regulatory organisation would be monitoring compliance. By analogy with the traditional banking and finance industry it could be easier to develop best practices and norms, and corporate governance standards for Islamic financial institutions. They will be rather recommendations rather than standards. What body will develop it? That’s a good question. As there is no BIS, IIF, and similar standard-setting organisations in the world of Islamic finance yet one has to come up with some sort of solution. But the demand for such standards should come from either the regulators or the institutions themselves.

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  3. aadil

    This is an interesting discussion. Thank you Darren for sharing this link with me via LinkedIn.

    Some points to consider for you guys, but please consider them from the context of how this sector may grow:

    1. One of the reasons for the apparent lack of consensus or regulation is that there are four Mudhabs/Schools of thought, in Islam and all four have slight Sharia variations on how to conduct financial transactions. So in the old days it was common to have different practices from one village to the other, yet both be considered Islamic.
    2. The issue is that this type of set up doesn’t work so well in the modern context as it creates confusion amongst non experts due to a lack of conformity/standardisation. In some sense therefore it is a block to its expansion/market growth.
    3. Currently Islamic Finance represents an insignificant share of world wide banking assets, as such it currently doesn’t make sense for players to spend time developing structures as their focus is to grab market share. I admit this is my opinion but there is evidence in the market place to support such an opinion.
    4. There are in fact a couple of Standard setter out there e.g. AAOIFI Shariah Standards and I am sure that in due course they will get their act together and develop an international standard that everyone works to. I have been a practising accountant for over 24 years and its has taken at least 15 years for the normal IFRS to get to the workability they are at now. It took the likes of Sir Bryan Carsberg and Sir David Tweedie a lot of effort to get things moving in a direction that worked for IFRS, So I guess you can expect at least the same with the Islamic Finance Standard setters.
    5 What’s really going to make a difference to the quality of ethics in the sector in the long run is the increase in market share. When it get’s significant there will be more a serious an concerted effort to get things ethically right. I think we can expect to see some failures in the system before it improves.

    I trust the above makes sense. Best wishes.

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