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There has been a dramatic rise in the availability in Britain of Islamic mortgages, which have to comply to a complicated set of religious rules, with several high street banks moving into the market. This increase in availability has, however, not been matched by an increase in take-up. Michael Ainley, head of wholesale banks and investment firms at the FSA, said ‘the Muslim community is still unfamiliar with the product. There are only a small number of banks offering these mortgages and the types of products are limited.’ Part of the problem is that western financial institutions are unfamiliar with Sharia law, Koranic phrasing and not used to liaising with religious leaders in designing their products.

The primary obstacle to any Islamic financial product is that either the paying or charging of interest is forbidden. Now Britain, with its large Muslim population and highly developed banking sector, is working to ensure that these rules do not mean people are effectively excluded from the financial system. Until 2002 the only institution to offer Islamic financial services in Britain was The United Bank of Kuwait, other institutions stayed out of the market because of a combination of technical and cultural problems, and a lack of demand. The slow growth and low take-up has been blamed on a suspicion on the part of many Muslims that religious laws will be inadvertently flouted because banks do not test the products rigorously enough.

Another, simpler reason for the low take up of Islamic financial services is that they are more expensive than standard services. This is due to both the higher costs of providing the services and also certain procedural matters such as a larger down-payment being required on Islamic mortgages. Arshad Majid, a provider of Islamic financial services in the US said ‘no one says that Islam is an easy religion to follow, but we believe that the rewards of being a Muslim are great as well. Halal food costs more money than regular food, yet nobody thinks twice about buying halal meat. Why would you think twice about doing Islamic banking?’

According to the FSA the Islamic financial market is worth £500m. However, it believes the potential is there for it to reach up to twice that size. Ali Ravalia, part of the capital markets team at the FSA, said ‘the potential is there for this market to grow. Originally, it was thought that this market could take off very quickly. It hasn’t, but it has the potential to do so.’

Britain is currently the only country in Europe with Islamic financial products available on the high-street. This despite the fact that France and Germany have sizeable Muslim populations. In the 2007 budget changes were made to the tax code with the specific aim of making london a key world centre in the development of Islamic finance. Dual payment of stamp duty was also abolished for Islamic mortgages, removing a major obstacle to their take-up

With increased awareness and costs falling compared to standard financial services it seems that the last religious obstacles to Muslims making the most of the financial system, through mortgages, personal loans or basic banking services, have been removed.

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‘Estimates suggest that 165,000 households in the UK are exploited by loan sharks every year with up to £40m lent and as much as £150m repaid annually.’ With Christmas approaching many are going to be tempted to overspend and loan sharks are always only too happy to take advantage of this.

To tackle the threat loan sharks present to many of the weakest communities a new nationwide scheme has been set up to help identify the culprits and protect the victims. The national project follows the success of pilot anti-loan shark teams in Birmingham and Glasgow, staffed by specialist trading standards officers working closely with the police

Telling the difference between a loan shark and a licensed money lender can be difficult. Licensed lenders still have collecting agents that go door to door and probably have very high rates of interest, but this is completely legal.

According to Steven Meale, who is the trading standards manager for Bristol City Council, ‘loan sharks can appear like a friend in the community who is there to lend a hand and step in if say the washing machine breaks down for example. Loan sharks may be held in awe in their community, they can be very well known and are often referred by friends. They can also have a very good knowledge of the benefits system. They can have a vested interest in making sure that their clients are claiming everything so that they can cream some of that income off.’

Unlike licensed money lenders loan sharks operate outside the law, their interest rates are usually even higher at extortionate rates and they often use intimidation or outright violence to reinforce their hold over their victims.

Meale explained that loan sharks usually have a specific type of victim in mind. ‘The people most at risk of loan sharks have a much lower than normal income, they may also have other problems such as mental health or drug and alcohol problems. They are often the most vulnerable and financially excluded people in the community, which is why the project is using a multi-agency approach.’

The most important part of the new project is getting victims themselves, or their friends and family, to come forward and make the new agency aware of the problem. Victims are often afraid to go to the police and yet heightened awareness and a media campaign over the Christmas period should change this. Loan sharking is illegal and there is no reason victims should let them get away with it.