Muslim Money Talk
Introducing the Muslim Money Talk Podcast, a place for all things Muslim and Money related.
Every week we'll be sitting down with Founders, leaders and industry experts from across multiple disciplines to discuss lessons learned, mistakes made and most importantly 'How they did it?'.
Brought to you by Kestrl: The Muslim Money App, software to help Muslims grow their wealth without compromise. Find out more here: https://kestrl.io/
Muslim Money Talk
UK Mortgage Expert: Authentically Halal? Buy To Let and Buying 1st Homes | Ep 40 Sagheer Malik
Meet Sagheer Malik, Chief Commercial Officer of Offa Finance, proving shariah compliant buy to let and bridge financing solutions.
He discusses the regulatory challenges surrounding UK Islamic Home Financing, along with the criticisms that have come his way from other practitioners! Sagheer also discusses the UK Muslim children’s adoption crisis and draws parallels between it and Islamic finance.
This podcast is hosted by Areeb Siddiqui, the founder and CEO of Kestrl, the app that helps people to grow their wealth without compromise
Find out more about our app here: https://kestrl.io/
And how we help banks here: https://business.kestrl.io/
Show Notes:
00:00 - Trailer
02:31 – The UK’s child adoption crisis
12:03 – Early career at Islamic Bank of Britain
16:37 - Being mentored by strong Muslims
17:39 - Being poor and Muslim
19:50 - Remembering the late Azhar Khan
23:22- Launching the UK’s first Islamic Bank
28:15- Mistakes made at the Bank
32:56- Why the name Offa?
35:42- How Offa fixes UK Islamic Mortgages
41:10 - Why are 2 lawyers often needed?
43:10 - Are some companies more authentically shariah compliant?
50:10 - Confusion amongst the general public
56:35 - Regulated vs. Unregulated Schemes: Stamp Duty, CGT and Variable Rents
1:07:50 - Offa’s future product offering as
1:11:48 - Should everyone buy property?
1:16:50 - The Story of Abdurrahman RA and charitable giving
The way that we do our home finance. You know, like you mentioned, the Diminishing Masharqa contract is the most widely accepted form of home finance in the country and across the world. So you're right, the biggest complaints were how long it was taking, and sadly those complaints are still valid with kind of not almost all the other home finance providers in the country?
Speaker 2:Is it fair for other people to try and differentiate themselves by saying we're more authentically Halal than someone else?
Speaker 1:It is extremely upsetting and very personal when somebody will say actually what you're doing isn't Sharia compliant and when it's the normal Joe public, I'm okay with that, right, that's just you know. That's my job to educate them. Where it's upsetting is when it's from fellow so-called practitioners. There's so many parallels I see between Sharia, adoption and UK standard finance.
Speaker 2:Yeah, I was about to say.
Speaker 1:Exactly because the same thing, imams and some scholars who are giving fatwas and opinions away when they don't really understand the basis behind it. Right, there's people who are actually looking to go for Sharia compliant finance who ended up going for interest-based Because the so-called new authentic, unregulated homophobic schemes had years and years of waiting times anyway.
Speaker 2:In today's episode, I'm joined by Sagir Malik, chief Commercial Officer and Head of Retail Finance at Offer Finance, where he's bringing Islamic finance into the 21st century with their property financing solutions. I'm saying finance a lot there. He has over 20 years of experience within this industry as one of the first employees for Islamic Bank of Britain, now Arrayon Bank. He gives his take on Islamic finance today what you, as a consumer, should be looking for when assessing different property financing solutions, as well as the mixed messages which are being put out by the industry and how to solve for that. We get into a lot in this episode, so stay tuned.
Speaker 2:As always, I'm your host, arif Siddiqui, and this is Muslim Money Talk. Before we begin, we actually noticed only about 10% of you are subscribed to the podcast, so if you like what you're listening to and you want to hear more from us and see more things Muslim and money related, then please consider subscribing and, of course, leaving this episode a like and share it with your friends. Leave us a comment or a review, because it really, really does help us out and help more people to find us. Thank you Now. Back to the show. Now, before we get into the episode, a really cool discussion happened before the recording actually started, around adoption and the adoption crisis happening amongst Muslims in the UK today, so we wanted to leave that clip in. It's not necessarily property finance or Islamic finance related, but it was a really beautiful message, so take a look.
Speaker 1:For me it's the dawah as well. You know, like, because you know Sheikh Sajid, for example, you know I had to convince him about giving a fatwa on UK adoption. Yeah, and he did Really, you know about adoption and he did Really. So, just, very quickly, it's between us, right. So you know there's a rule All the children we've had are under two right, and you're able to give milk. If you're able to give milk, the makram issue is sorted out. There's no makram issue.
Speaker 1:However, sheikh Tawfiq Chaudhary told me, right, because I thought there's a sad stat out there that children over two Muslims right, they don't get adopted. Yeah, under two, actually, there's no need to. I mean, you know it's good to get more adopters, but actually there's enough adopters, muslim adopters for Muslim kids, but over two they don't have. Bad stats In some local authorities, right, where there's like 400 Muslim kids put into care. Last year, you know like, only 10 Muslim carers were able to take care of him, right, wow, some, like it's like one in eight. You know, muslims adopt him. And because he's over two years old.
Speaker 1:And the Sheikh then said told me, and I told Sheikh Sajid this, right, and I got him in touch with a social worker to prove it to him, and then he, right, you know the overriding principle of Islam. Right? And number two everybody knows about, yeah, preservation of life, you know. So if the only thing keeping you alive is eating pork, you can eat pork. Right, because, preservation of life. But what's number one? The preservation of wealth comes after. Number one is preservation of the faith, of the faith, the deen.
Speaker 1:Yeah. So if these kids are going to lose their faith, yeah, you're able to do things that are kind of not permissible. They become permissible for you. So actually there's a weak hadith that even if the kid is before puberty, if the mum gives him milk and through five feeds, which can be just a drop, it can be in a cup or whatever. That's classed as mahramia even before puberty.
Speaker 1:Now, most of the kids that need to get adopted are before puberty, right, and after two. So Aizan said to Sheikh look, man, we've got a big issue. And he said no, I've not heard that before, but he's obviously a lot of the scholars they've been taught in the Middle East. So now I've got him in touch with a social worker and Sheikh Sajid look guys, there's a weak hadith out there. There's a precedence Makadil Sharia. Preservation of faith is way more important than this and the fact is so for that family, for that person, it becomes permissible. And that as we set up a scholar's helpline of the different madahibs from Hanafi Braille with the Bundy event, like that level yeah.
Speaker 1:Okay, you know, and then from you know, akhleti Salafi, we had that you know, done where the scholars you know you go to your local imam. You know most of them don't know much right kind of group I can call right and then I can speak to them and they'll give me the kind of the fatwa for it because I remember with my local it's exactly as you're saying with local imams.
Speaker 2:My brother and I were attending our jumma and the khutbah that day was about adoption and the imam mentioned that you cannot adopt yeah, subhanallah it's haram to adopt. And then my brother, you know, stayed quiet. And then he came to the imam afterwards and said you know, I have to dispute that because I think, you know, there are many options where which are available and there's different fatwas. The imam just didn't want to hear it at all.
Speaker 1:So it's funny saying this, I'll tell you on the story. So I used to do purely for charity you know like, and for my own sake, you know, for my career I used to do kind of loads of different uh seminars and groups you know to and groups as part of the charity. One of them was with a group of scholars and one of the scholars was a mufti from a dar al-Rulun up north I won't go into it anymore and he had a book written and in the book he had said something exactly the same Adoption is haram and fostering is halal. So then I explained in this lecture a seminar. I said, look, let me ask you scholars here right now In UK adoption.
Speaker 1:This is how it works In UK adoption. You don't have to give them the surname. All right, you know. So you know. You don't have to give them the lineage, because UK wills are amongst the most flexible in the world. You don't have to let them inherit either, so they don't automatically inherit. You can have your will amended so they can get your Waseer, but they can't inherit the rest because they're not a logical child. Also, uk adoption recommends that you tell the children that they adopted from early on so they know that they're early on. And then you've got this thing with Mahremia and so on as well. I said, from that perspective, if somebody was to adopt via that route, is that halal? Every one of them said that's halal, adoption's halal.
Speaker 1:Now then in my presentation I brought up an extract of a book that one of the muftis in the crowd had written, where it categorically said adoption's haram, fostering's halal. Obviously, I cut out most of it so it's possible to know who kind of wrote it. I said, look, guys, here's a book and I won't mention who it's from, but it's from a renowned Mufti in the UK. And I said look, guys, can you see that Now? And as I explained to him, look, giving fatwas without understanding the context, the dangers of giving fatwas without speaking to practitioners, right, just basically, purely on Quranic texts or some hadith, but without knowing the context behind even that hadith, right, or the ayah, and how that applies in the UK. So you know, obviously, adoption in the Quran mentioned adoption is haram right.
Speaker 1:Obviously, adoption, the Inukhwan mentioned adoption as haram right and that was because adoption in the Arab times, back then pre-Islamic times, because Prophet Sallallahu Alaihi Wasallam adopted, yeah, yeah, zayd ibn Rana, right, and his name used to be Zayd ibn Muhammad, right, because when you adopted back then the way it worked was that they become part of your lineage, so they take your name right and they become like a biological son. And then we know that Ayaz came down, we said he can't do that anymore and his name changed to Zaid ibn Haritha. So that part is point. But what is the difference between adoption and fostering in the UK? The difference is permanency.
Speaker 1:If you foster someone, it's a temporary thing. Somebody else can come along and adopt them and you lose a child and that other person could be an un-Muslim ultimately, right. And then they if a Muslim child that's gone to an un-Muslim and brought up as an un-Muslim. So actually adoption gives that permanency that nobody can come in ever to take the child away. But you can still bring them up according to UK adoption, according to UK law and according to Islam, where they don't take a name, they don't take a lineage, they know they're not a biological child and that they are adopted and so on and so forth. Right, and all the scholars agree that that's halal. But that's UK adoption and that's the problem. There's a thing that your brother faced. That imam clearly didn't understand what UK adoption can look like. And this is the point of educating the people. And like, and this is the point of educating the people, and I swear there's so many parallels I see between Shikha adoption and UK Islamic finance.
Speaker 1:I was about to say Exactly because the same thing imams and some scholars who are giving fatwas and opinions away when they don't really understand the basis behind it, right, the basis behind the fatwas given by the top scholars around the world like Nusri Taki Uthmani, the late Abdul Sattar, abu Ghudda, and how they've taken into account UK legislation, regulation and tax and so on, and then linked it back to the different hadiths, the practices of the Sahabas, the Dabi'een and so on and Ayas in the Quran to be able to give relevant fatwas. It's a very complex subject and, you know, for a proper scholar to give a fatwa on Islamic finance, they don't just need to be an Islamic scholar, they need to be an expert in finance.
Speaker 2:In many cases, chartered accountants and lawyers and so on. Exactly.
Speaker 1:That's right.
Speaker 1:And how many out there, how many scholars do you know out there that understand even the basics of finance, let alone the actual complex intricacies of modern finance that exists in the UK and the Western world?
Speaker 1:And this is where the danger comes into about giving fatwas without a background understanding.
Speaker 1:An example I give about adoption is quite obviously important to me because I adopted Mashallah and I've been correcting people's views on it. But sadly the parallels are there for Islamic finance as well, and even zakat and sadly, the amount of imams I'm one of the board advisors of the National Zakat Foundation the amount of imams that don't understand, sadly, how to calculate zakat in modern times is shocking and that's also part of Islamic finance, clearly. And if you don't even understand how to really give advice on what zakat somebody should pay, on the different types of assets that they have, how on earth are you going to give them some proper advice and fatwas and viewings on complex products, financial products in the UK? So I think that kind of awareness needs to go out and I'm sure much of you guys are doing really good. Ribbuff Free Foundation are doing some really good work as well. We're trying to do that work as well, and have been for the last 20 years. But there's a lot more work to do.
Speaker 2:There is, but the change is starting. The change is happening and it all started over 20 years ago with the likes of yourself and the others here. So that's IVV, but let's get into it, thank you. As-salamu alaykum.
Speaker 1:And welcome to Muslim Money.
Speaker 2:Talk. How are you? Wa alaykum as-salam, rie.
Speaker 1:Alhamdulillah very good. Thank you for coming down today.
Speaker 2:No, no, thank you for hosting us in your offices right here in Birmingham. It's our second or third time on the road with this show and it's our first time in Birmingham in a sunny, solid hall today. So you've, it's a beautiful space here with, like, there's like 30 people out there.
Speaker 1:Yeah, they are. We're expanding quickly. As I mentioned earlier, we're actually looking for either expanding, getting more office space within this building, or moving into a different building. So, mashallah, we've more than doubled the size from last year and we're looking to double again this year. Incredible A lot of good work, but also a lot of stress as well in trying to find the right type of people.
Speaker 2:Yeah, of course work, but also a lot of stress as well in trying to find the right type of people. Yeah, of course, of course. There's so much I want to talk to you about today from your background your history in Islamic finance, what you're doing with Offer Finance today and where you see the industry going, as well as some of the juicier bits, which is your response to some of the criticisms around this industry in general. Sure, but before we do all that, I always like to ask this question Is this what you imagined you'd be doing as a child in Islamic finance?
Speaker 1:Not at all. Growing up I mean I'm in my 40s now Growing up there was no concept of Islamic finance. When I was a child no one had heard of it and education on even rubber was quite minimal. So yeah, my interest actually was in tech. I was always interested in computing and then eventually went in uni. I studied computing for business, so that was where you know I kind of saw my career going into when I actually, when I started learning about kind of computing and coding and so on at uni, I realized actually I was less interested in that side of computing and more interested into the business side of IT and that's why I kind of changed my degree into competing for IT in Aston and so yeah, but growing up very much interested in trying to get into tech, yeah, but you grew up here in Birmingham, went to Aston University that's right, fantastic and then you found yourself as one of the if I'm correct in saying one of the first employees at what was Islamic Bank of Britain at the time.
Speaker 1:Oh yeah, I joined Islamic Bank of Britain in September 2004. Right, and the bank that month, or just a month before, received its license as a bank and it was the first bank of any kind to get a UK banking license in over 50 years. Huge, it was a huge deal. Right, and obviously, the first bank Islamic Bank in the Western world right, it's a huge deal. And I joined. I was approached by them and he was quite a junior role as a call center agent and I thought you know, I've just left uni, you know I'm looking for a job, let's just try it out.
Speaker 1:And the interview process was crazy. It was such a tough interview, right. I thought I actually had to ask them because it was like I don't know, two or three stage interview. And you know, I was interviewed by the executives, interviewed by, and I said, guys, you just want to understand, I am applying for a call center agent, or this is not a graduate scheme or anything else.
Speaker 1:What's going on us and it's something that I've stuck with me forever and something that I'm doing in Afa now as well, which is that we're looking at the people we're hiring right now. We're expecting some of these people to become the future leaders of Islamic Bank of Britain, ibb. So, okay, you might be a junior role right now, but you guys could be the future leaders, could be ones running the company, and, alhamdulillah, that is what happened, not just with me, but a few others as well, and I've taken that concept with Offer now as well. You know we set this up. You know, and I mean last year we had 13 staff, now we've got 30, next year or end of this year we'll have about 60. That's the kind of rigorous kind of employment checks that we're doing right now, with the mindset that some of the people that we're bringing on board today could be the future leaders, future heads, of future executives. Incredible.
Speaker 2:No, I love that ethos. It's something we've already adopted at Kestrel as well, in that some of our first employees were interns or grads straight out of university, and they were very junior. What we were really looking for was a drive, a willingness to learn and just kind of that humility to understand that, okay, you're not going to know everything, but we can take you on that journey. And so finally, some of them are leading departments um running their own projects with their own client base.
Speaker 1:So that's really something we we try and push for at Kestrel as well, and it's important because those early days, I think the one advice I would give you that you know, in that regard it's something that I went through is that, especially those kind of young graduates that you think have got the potential to go forward, the key thing is to give them mentorship. And, alhamdulillah, I was extremely blessed to have amazing mentors. So my first mentor actually at 21, when I started working there, was the late Azar Khan, were they? Yeah, that's right. So Azar Khan and our chairman, sultan Chaudhry, they were the actual founders of Riyan Bank, right, the directors there, and Sultan obviously became the CEO and Azar was so he was my line, you know, head at that time and, yeah, he took an interest in me and you know it was really tough love Really.
Speaker 1:And you know, and as they say, sometimes medicine is a bitter pill to swallow, right, and I didn't like it at the time but always appreciated it for him and we became very close friends. You know, afterwards as well, that was a big deal getting that type of mentorship from others. You know, I grew up from an area in Benin where people also live, so I had no real exposure to the corporate world, so this was the first exposure I had and to get that kind of mentorship was amazing, and also to see a practicing Muslim, you know, who was performing at such a high level in the corporate world. It's the first time I'd come across that, because once.
Speaker 2:there's this idea I think a lot of us have this growing up as well, have this growing up as well, especially those of us who are a bit older which is that piety does not equate to being rich, like if you're pious, you're kind of poor in some way. Was that really your mindset growing up? Oh, massively.
Speaker 1:Sadly, that was the mindset. And then, once you start learning about Islam, you realize of the 10, top 10 Sahabas who are guaranteed heaven, most of them were million billionaires, yeah, exactly, if not even a billionaire. Exactly. And sadly, that is what I grew up around and also, sadly, the type of Islam I was learning when I was growing up as well, was kind of very mystical and very kind of non-pragmatic right. And he actually didn't put me off the religion. I'll be honest with you Really.
Speaker 1:Yeah, you know, growing up I mean I was very much into it as a child and then and I don't want to go into the specifics of it but a lot of things kind of saw a lot of hypocrisy, a lot of stuff that didn't make sense.
Speaker 1:And he put me after religion and so meeting Azhar and then also meeting Sultan, right where there's two very practicing, very proud and open Muslims, you know, weren't hiding the Islam but also extremely successful in the corporate world as well, it kind of reignited that passion for Islam, you know, and allowed me to kind of start learning about the religion and properly practicing and the reason and I've still obviously stayed in touch with Sultan now we're both business partners, of course you know, but the loyalty for me has always been there with him because of those early days, right From somebody at that time, sadly, who wasn't practicing, you know.
Speaker 1:From then, learning about Islam, learning about it, you know, in the right ways, and then getting into all the different charity works I got into and, like I said earlier, properly learning about the religion, practicing and getting involved in different charity work, helping set up this kind of Muslim fostering adoption charity. It led me to actually adopting my own children. So, mashallah, yes, I'm extremely grateful for my time there, not just from a professional perspective, which I developed a lot, but more importantly as a Muslim and as a man as well.
Speaker 2:It changes the trajectory of your life. It sounds like, and for people who don't know, the late Azra Khan he passed away, unfortunately, just a few months ago. Most recently, his role was as CFO of FIDA at the time. I believe that's right. I never had the pleasure of meeting him, but I was at a meeting where many people were sharing stories about him and the impact that he'd left on them, and I was wondering is there like one lesson or takeaway that you want to share?
Speaker 1:Azhar and he's passed away now so I can't talk about it right, but I would never say this when he was alive was amongst the most generous people I've ever met, you know. So I did his finance applications, like I did for a lot of people, and I remember speaking to him at one point saying Azhar, look at the amount of charity you're giving, and I know the Haditha charity. The more you give, the more you'll get back, and I'm looking at it, azhar, on an affordability basis.
Speaker 1:Here you have to go through it. The amount of charity you're giving is going to make it quite tight to affordability and obviously we were able to approve it anyway. But the point was I've never seen anyone giving that level of charity. I don't mean as an amount of charity but I'm talking about as a percentage of income. Wow, I've never come across that. And, masha, look, I've done more home purchase plan kind of originations and advice than anybody you know originated over a billion pounds. You know, through my career and through my teams, and I've never come across anyone who gives the way, that level, that amount of charity as a percentage of income.
Speaker 1:Ever Most generous person ever, not just with money but with his time as well. And for him to give me that time early on in my career when I was a 21-year-old kind of entry-level staff member, shows the level of generosity and the effort they put in in trying to kind of help me, groom me into the kind of person I am today. It was amazing. So, yeah, I mean that would be the one thing. The big lesson for me would be the generosity, not just in time, you know, I mean he was also, you know, one of the trustees of charity, right.
Speaker 1:He was also involved in the Waqf that me and Sultan were involved in. He was also involved in you know so many different charities we've been involved in as well. He's donated all the charities I've ever been involved in as well, you know. And there's so many people out there, I mean it'd be hard to find a charity that he hasn't donated to. Yeah, so mashallah. So that way, I would say trust in Allah and be generous with your wealth and with your time, and you will get the barakah back and look at the legacy he's left behind.
Speaker 2:Especially, he was taken too soon, but you know, despite that, the legacy's been left behind.
Speaker 1:And then I was lucky, actually, that my other mentor was Sultan.
Speaker 1:So I've been reporting to him, you know, and his mentorship was very different to others, right, you know, his was intense, like he's like just pull you back again and then push you again, and I massively appreciated that and I think that's what I've tried to do throughout my career as well, and I'm glad I've also, you know, I've had some stories where I've got staff members not even working for me, you know, and other companies that I hired I was able to mentor and I can be privileged to say that if I look at all the Islamic finance, the top Islamic finance brokerages, the top Islamic finance institutions, a lot of the key staff working there they were hired by me.
Speaker 1:Some Islamic banks out there right now, or even conventional banks that do some Islamic kind of window, some of the top staff out there were hired by me. So, Alhamdulillah, that was something again inculcated into me by the late Azhar and also Sultan, and that's the advice I would give to you. I'm sure you are doing it, but you have to put in a bigger kind of emphasis, if you can, Absolutely into that mentorship.
Speaker 2:That's right. So tell me what it was like at the time, because it was 2003, 2004. You were the first Islamic bank in the Western world to have opened up. What was the reaction like? And and well, to have opened up, what was the reaction like? And also, you guys launched the first home financing product, the first buy-to-let product, the first buy-to-let product in the UK.
Speaker 1:That's right. So me and Sultan were involved in launching that first buy-to-let product Incredible.
Speaker 2:So I want to know, like, what was the vibe like? How were you guys feeling? Was it stressful, was it exciting, was it a bit of both? And what was the reaction like from the public?
Speaker 1:It was exciting and I think it's become easier ever since. That was the toughest time to talk about Islamic finance. It was new and we were faced with a lot of criticism. You know, a lot of people saying that it's all fake and so on, because it's so new and, you know, because no one had really come across Islamic finance.
Speaker 2:Plus, there was a bank before which had collapsed.
Speaker 1:Yeah, so this is a BCI, yeah, bci. So this is a problem. So it wasn't regulated and this is an issue that… it wasn't, it wasn't right and this is an issue that we're facing now, sadly, with this new kind of unregulated home purchase schemes that are coming out, the dangers of it are phenomenal. So that bank, the Pakistani bank that came in the UK, was not regulated. A lot of our dad generations, right, were very familiar with it. It was way before. I mean I must have been like in my nappies at the time or kind of very young when all that kind of stuff happened and I don't know the exact details of it. But ultimately a lot of people lost a lot of money from the investments and financing and so on that they put in there and so it left a bad taste. And I remember we had to be given a script so we understood what was BCCI. We had to be taught about it and it would just explain to them, guys, that was a non-regulated entity.
Speaker 1:The level of scrutiny and accountability just wasn't there. I mean, I'll just give an example about often, scrutiny and accountability just wasn't there. I mean just give an example about often, you know, as you know, we heard, you know, very recently, we received you know, we've become regulated Thank you for the FCA on Islamic home purchase plans, which are the Islamic equivalent of mortgages. And you know, and you know this. You know, ari. But what does it mean to be regulated? The level of accountability that you have is phenomenal, right, not only do customers have an opportunity to complain about us, to be regulated directly, you know if they weren't happy with us, but actually we are personally liable, not just from a job perspective, but we can be fined and even given custodial sentences. Right, that's not what you get.
Speaker 1:You know that level of accountability with these unregulated schemes. Right, and we're audited internally. We're audited externally and audited by the regulator as well, and you know, and with people in offer whose literally necks are on the line, yeah, because if anything was to go wrong, even if something didn't go wrong but you didn't have the right controls in place to prevent something going wrong, you could get those fines and sentences. So it doesn't necessarily mean that something bad happened, just that, oh, if you didn't have the right controls in place, you're lucky, something bad didn't happen, but because you didn't have those preventative measures, we're still coming after you. So that's the problem. That's the problem. That's what BCCI didn't have and that's a lot of issues I have right today with some of the new kind of unregulated home purchase plan schemes where they're not regulated. And do consumers understand the importance of that? I don't think they do, but at the time you guys getting your license.
Speaker 2:Did consumers appreciate that and did they understand the difference between that and BCCI?
Speaker 1:Well, look, the reality is, and not just with Muslims across the UK. I mean, there was a mortgage market review done not long ago by the UK regulator when they found out that over 90% of the UK population, everybody, most of 90% of them are not financially savvy enough to choose a mortgage product themselves, that they need advice for it. That just gives you an example about the lack of financial knowledge. So a lot of people really didn't know. They didn't understand you know the implications of having a, you know a license, having a banking license, how big of a deal it was and so on. We tried to educate them and look like anything, it takes time, right, and it took quite a bit of time. I remember we were having our calls, you know, at the call centre back then and the branches. They were like 40 minutes on average and it was just about explaining about what we do, how is it Islamic, how are we safe and so on. But you know I don't regret that time. I really enjoyed looking back at it. I miss it because that based the foundation of what we had as people and as an organization and the level we got to in Alhamdulillah was because of those times.
Speaker 1:Vibe was amazing. It was a. You know we were pioneers in the frontier land. You know it was amazing. It was tough. Mistakes were made as well. You know, as expected, like I said, first banking over 50 years to be set up of any type. So who can you go to for advice in certain areas and so on? Right.
Speaker 2:What mistakes do you think were there?
Speaker 1:So look I think, yeah, I want to be kind of quite candid in that it's quite easy after we've got the power of hindsight to look back and do it right and we, the industry, would never have been in the position it's in right now With Mashallah. There's so many Islamic kind of finance providers out there, including yourself, you know, from various different home finance to kind of you know savings to, you know personal finance exactly, yeah, from current accounts and e-wallets and so on Wouldn't have happened without that work that was done in the early days, for sure, you know. And so ultimately you know various different things. I mean ideally, you know, we would have been able to put a lot more focus on technology, you know we would have. The issue was we could have developed the products you know a bit better from day one, you know, but obviously ultimately we learned those lessons and were able to amend the products.
Speaker 2:Because you guys were moving at breakneck speed at the time. I don't think a lot of people realize, but for a bank to get its license, get the funding that you did launch that buy-to-let product.
Speaker 1:We launched a current account savings account first, the first savings account right. We launched a current account. We launched our home finance home purchase plan product, the Islamic residential home finance product, Then the buy-to-let. Before that, we launched commercial property finance. We launched ISIS.
Speaker 2:And then you also listed on AIM, the Sovereign Stock Exchange's AIM exchange, exactly. Which is kind of crazy.
Speaker 1:Had it happened today.
Speaker 2:It would have been worldwide news, People would have been picking it up and it was a key at the time.
Speaker 1:There was a lot of news and you know we opened up eight branches. So again one of the things in hindsight we shouldn't have opened up the branch network so quickly and so expansively right.
Speaker 1:Instead, that money should have gone more on to, you know, building a better tech platform. Sure, you know, like the kind of ones that you know, whatever the equivalence back then that's what we should have put the money into, as opposed to this kind of branch network. But again, these are lessons we learned. Other issue again was, you know, it wasn't just the management team, right, you know, it was the limitation to the shareholders as well of what you could and couldn't do. So that was again quite an important aspect when we set up Offa was about one, having the management team later and also then having the right type of shareholders that would allow you to do what you need to get done as well, you know. So, if you remember, the shareholders generally for most islamic class institutions are middle eastern and the industry they're very different industry here, right, one is tiny and actually it's less sophisticated in the uk kind of market and um and it's just having that.
Speaker 1:And at that time the problem was there was nobody ultra-credible, because there was a guy called Michael Hellman who had set up a bank in Poland.
Speaker 1:An old English man didn't really know anything about modern tech, banking and so on, and the rest of the guys like Sultan Aziz and myself. You know we were untested right as bankers and so when these ideas were coming out, it was easy for the likes of the people at the time to kind of reject them, to bat them away. Now we know what we're talking about. The difference today, you know, when we set up Buffer, was actually we are, alhamdulillah, the most experienced executive Simon Farrar's executive team in the UK, right With accolades of being the first ones to do a, you know, 100% asset-backed SACUC, being the first ones to launch an Islamic bank, first ones to get a credit rating, you know, originating the most on finance, and so on and so forth. So where new shareholders would be able to get it was a totally different dynamic. There's a lot of respect there and a lot of freedom given as to what we need to do.
Speaker 2:Thank you for listening to Muslim Money Talk. If you like what you've heard so far, you might be interested in checking out what we do at Kestrel, the Muslim Money app. Kestrel is a service that helps Muslims who want to grow their wealth without having to compromise, whether it's on their belief or user experience or price. I founded Kestrel because of how fed up I was at how poor Islamic financial services were in this country. Often people didn't use them because of how bad the user experience or customer service and indeed, how high in price they were. So Kestrel was the answer to that. If you download the Kestrel app today, it can help you by creating a budgeting plan. Plug in whatever bank account you have and it will create an auto budget just for you. You can then tell us what goals you're saving for, and we'll save towards them automatically into pot and then, crucially, link you towards Sharia compliant investment and savings products as well. So download Kestrel today and try it out for yourself.
Speaker 1:Now back to the name. I'm a proud Brummie, as you know. You're Birmingham and Basar, masaf Sultan, and I'm one of the founders, bilal, and one of the directors. You know, we're all born in Birmingham, you know, and to come from this area. And our fourth partner, amir, who was a CFO, is Malaysian, but he settled in Birmingham, his kids are based in Birmingham, and so on.
Speaker 1:So we were basically, you know, promise, king Offa was. So Offa is named after a king in the eighth century in the UK and he was based in Mercia, basically in the Midlands, right. So he got effectively a Brummie and at the time he was the most powerful king in the UK, right. His kingdom was from Manchester to parts of Wales, all the way to London and Birmingham, and he did that trade deal with the Muslims, with the Abbasid Empire based in Spain. Oh, really, yeah, okay, and it was the first time Muslims came to the UK, all right, it was also the first time an Islamic finance transaction was done, because, to commemorate the trade deal, a gold dinar was made and on one side it said King Afa in Latin and the other side was a Shahada, and that coin, by the way, if you want to Google it. It's in the British Museum, you can see it there right now, and it was found at the Safraji hoard not long ago, I think about eight to 10 years ago, and so on. So we love that.
Speaker 1:So here's a guy. He's a Brummie, he's you know, it's the first time Muslims came to the UK, first time Islamic finance was done, and actually that dinar, it was available to be used by everybody, right? Not just by Muslims but non-Muslims, and Islamic finance is for everybody. And so what we want to show was that Islam and Islamic finance isn't something new. It's actually something very old, right, you know, it's the 8th century. That's how far back it goes, and that's why we took the name and actually mashallah for some of our products. About 44% of our customers are not Muslim. Wow, that's what we want to say. Go with a name that is, you know, doesn't maybe sound Islamic, but it's intrinsically linked to Islam. Right To Islam. Right, to show that, you know, again, we're proud Muslims, yeah, we're proud, you know, Brits, and we're proud Brummies. Ultimately, right, and our product and our company is the same and it's available to everybody, muslim and non-Muslim alike. Wow.
Speaker 2:I have to do more research into that. Like what a forward thinking king from the 700s, yeah exactly. Effectively willing to do business with anyone. I think a lot of lessons can be learned by some of the people today who are less talking and complaining about Muslims coming into this country and taking bad jobs. Exactly We'll have to check out that coin, incredible. So then Offa kind of came in to solve a problem that was there in that.
Speaker 2:I think, at the report or a stat I saw just a couple of years ago. Islamic mortgages whether it was buy-to-let or retail, I can't remember, but were one of the most complained about products, financial products on the market in the UK. That's right, 100%. So how does Offer directly tackle that? Because I think some of the complaints were around slow decision-making, excessive and often unnecessary documents, the fact that you needed two lawyers in some cases to opine and just how long that process took. How are you guys fixing that?
Speaker 1:So thank you. So this is exactly why we kind of joined Offa, bought into Offa and they were able to raise the funds. You know, the new shareholders we bought in to call for Islamic investments. You know, I was part, you know, of one of those companies right that where we used to get lots of complaints about and so on, and the root cause was quite simple.
Speaker 1:The process is, the technology wasn't brilliant and it was extremely difficult to get those changed, you know, and updated, and that's why the Altney offer came about. The offer actually came about as being the first Sharia compliant bridge finance provider and when we joined, we Sharia compliant bridge finance provider and when we joined we wanted to expand that into all sorts of property financing. So we spent a lot of money in the tech. Alhamdulillah myself, you know as being the biggest expert in Islamic home finance in the country with my team and the other executives, sultan and Amir, were able to fix that problem and we've done that now, alhamdulillah. So, you're right, the biggest complaints were how long he was taking and sadly those complaints are still valid with kind of not almost all the other home finance providers in the country, and you know that. You know you're probably a customer of theirs. You speak to enough people out there that you know speak to brokers. That's the case, right? Things haven't really changed much.
Speaker 2:Every single customer interview we've done where it's someone who's taken out a retail mortgage, nearly like 90% of people, say that they almost lost the deal because of how long it took for them to get approved.
Speaker 1:Exactly, it got to the point where estate agents were putting off customers when they found out that they're taking out the property through Islamic Home Finance right Because of how long it would take. And, like I said, that's still happening today. What we did was we've designed a system now, alhamdulillah, where, based on tech, most of our customers as long as you've lived in the property for three years and you register for voting we've got enough data about you that the information was shooting to a credit engine, and I know we've got loads of you know, obviously I'm going to provide you information, but we've got loads of APIs built with kind of different providers and the tech that we have internally that we're able to make a decision the same day for you without requiring almost any documents. So, if you're refinancing, we don't need your payslips, we don't need your bank statements, we don't need your passport. We'll just give you the decision to get approved or not, day in and day out that day. If you're looking to buy a new property, the only document in most cases we need from you is a bank statement to show your proof of funds right when your deposit's coming from. Now, our average time to take so far this month for a decision is three hours. Your average time to make a decision in the last three months is basically under half a day. So basically the same day you apply with minimal or no documents, we're able to give a decision.
Speaker 1:Another issue that you get with the other Islamic finance providers is even one is a whole host of documents you need. I'll give you an example. A lot of them will need three months bank statements of every single bank account that you have right, even bank account that you have a little balance on, even bank account that you've had some money in for a long time and whatnot. Why is that relevant? Why do they need to know that level of information? Right, and it's quite hard to get that as well, especially if it's a little balance account that you haven't used for quite a while.
Speaker 1:Trying to get bank statements for that is quite difficult. It delays the process. Then they ask you a lot of questions. Some of them are quite stupid. I mean, I've got somebody very close to me who applied recently and they were asking them oh, we can see some credits in the account. What are they? And it's quite clear it says refund from just say next, like a shop, right? So the answer back was they're refunds from some clothes. We returned back right For next. They accepted the answer and moved on right. But why even?
Speaker 2:delay. Why did you ask that?
Speaker 1:question yeah, wait for two days to assess the application. Delay answer comes back and it takes another two days to reassess the application right.
Speaker 1:So that's the first thing where it takes weeks sometimes to get decisions, you can get it with us within a few hours, actually. Second part is then how long does it take to get an offer? So an average for us, Mashallah is within a week, normally about up to eight days. The next big issue so that's the one issue is underwriting, and, honestly, I had so many complaints that you've heard, and I won't mention some of the things that people said do you want this off me? Do you want my blood? Do you want this measurement? What else do you want from me?
Speaker 1:Some of the stuff wasn't even Sharia compliant, right, so you can't mention it, but that's the level of frustration people had. So we fixed that. We got to the point where not only is offer faster and simpler and easier and quicker to get finance and other Islamic finance providers, but also and not just the kind of the regulated ones, but also from these new unregulated home purchase schemes right, we're faster, but we're actually better and quicker and faster than any high street bank in the country as well. The second big issue is when it gets to the convincing process, right. So which is the lawyers? Yeah, so all other Islamic finance providers require you to go for two different lawyers. Why is that? All other Islamic finance providers require you to go for two different lawyers. Why is that so?
Speaker 1:Ultimately, how it works in the conventional world is that basically, you go for one lawyer and that lawyer will act on the behalf of the bank and act on behalf of the customer.
Speaker 1:And it's resolved With home finance, because we buy the property and we own it in partnership with you and then we sell our property back to you. So, because of the additional risk we're taking because we own the property, a lot of these other Islamic financial institutions just want to take the extra coverage for the risk by saying we want our lawyer to do all the checks as well to make sure everything's in line. But we've been there, done that, we know what kind of risks there are, we know how to design our contracts and so on and the guidelines we've done right that actually we can trust the lawyers to act on our behalf. So we're the only ones out there you know that give the same level of ease as conventional providers, where one lawyer, instead of having two, would act on both of their hearts. So there's less to-ing and fro-ing, less delays and lower costs involved as well.
Speaker 2:Because the contract that you guys use, the form, it's a diminishing Warshara contract.
Speaker 1:Yeah, that's right, so it's basically a co-ownership.
Speaker 2:Co-ownership yes. With the buyer. You yourselves offer as well as the buyer. You're co-owning this and then over time, they will purchase through their repayments. They'll purchase back more and more of the thing over time. But every other player out there all the other assignment players felt that you needed two lawyers one to represent the buyer and one to represent yourself.
Speaker 1:Because of the fact that they own the property like we do and that's because they just, I guess, haven't got the level of confidence or understanding like we do. You know, we've been there like you know, we've been there doing the long-distance market. We understand it better and we've designed you know the processes, the risks, so the risks are mitigated and the confidence therefore is there.
Speaker 2:Yeah, it's a consequence of the tech that you're using, as well as your experience. Fantastic. I want to move into something that I know you're very passionate about. I don't know if you remember how we first met.
Speaker 1:Well, the most memorable one is at the Lord Mayor show. The Lord Mayor show, you say we can put up here.
Speaker 2:There's a picture taken from BBC where Sigeir and I are walking in the streets in London at the Lord Mayor's parade and our brother, majid Dawood, was very kind enough to give us a slot in this Islamic finance float that had been set up, which is basically us walking with these flags on our backs, with our logos.
Speaker 1:Representing Islamic finance.
Speaker 2:Yeah, yeah, exactly, and I think when we first met, you were talking so passionately about something that you felt was going on at the time and that there was, almost amongst all these new players, some people who are marketing themselves as more authentically sharia compliant than others. Um, is that the biggest challenge you're? You're facing now in that it's. We've spoken to other people about this muhammad baraja, multi-parasa adam and got in their takes and people can check out previous videos, but I'd love to hear your view on that as a practitioner. To just as a response, is it fair for other people to try and differentiate themselves by saying we're more authentically halal than someone else?
Speaker 1:yeah, no, so I so thank you for asking the question. Yeah, and I'm very passionate about that because I'm not some kind of uh, to make it clear to everybody, I've never taken out conventional finance, I've never worked in conventional uh providers, right, I'm the one kind of and it's a wicked clear to everybody I've never taken out conventional finance, I've never worked in conventional providers, right? Alhamdulillah, I've been, you know, blessed and privileged enough that you know I've stuck with Islamic finance, right. So my income has been, alhamdulillah, halal throughout my life and I've had opportunities throughout my career to get massive pay rises. At one point I had a job offer which was double the income, right, but working for conventional, and I turned it down and I've turned on loads of other opportunities Because to keep my income halal. You know and that's not just me, I'm not the sole person in that there's so many of my colleagues who've been through that same journey right, where some have actually left conventional, taken PECUS, to go to Islamic. Some have actually left conventional, taken Pekus, to go to Islamic and some, you know, same as me, some same as me, who've turned away kind of big pay rises and promotions to keep the income halal.
Speaker 1:So it is extremely upsetting and very personal when somebody will say, actually what you're doing isn't Sharia compliant. And when it's the normal Joe public, I'm okay with that, right, that's just, you know, that's my job to educate them. Where it's upsetting is when it's from fellow so-called practitioners right. So people, if people want to say that they're more authentic, fine, right, that's, you know, that's their kind of take on it. You know, and we've got our own take on it as well.
Speaker 1:But my bigger concern is and again, I'm sure my views are probably in line with Mufti Faraz Adam and also with Muhammad Farashi as well where it is actually and it should be taken personally, because I know the dangers and I know the issues of riba. You know waging war with Allah and the Prophet and all the kind of hadiths are extremely harsh. You know, the only time for the Prophet was, you know, the harshest language he ever used was when explaining Riba, right and so to be accused of that right after sacrifices I've made and other colleagues have made, right, you know, and you know sometimes you even get a backlash from your kind of wider network and your friends, you know your family, just saying why are you kind of, you know, turning away this level of money and job opportunity. Right, it's the same thing in their heads.
Speaker 1:So you take the backlash, you go through this kind of hardship and then to be accused of, oh, what you're doing isn't really compliant for people that should know better is very upsetting and that's why I am very impassioned about it. I'm not as diplomatic as some other people out there right now, so I'm very open and happy to be very open about it with people as well, and that's why it very rarely does anyone come to me to my face and say that you know, it's normally. They'll go on podcasts and go on other places right, you know, and say it, but when they see me, they will never, you know, and sometimes they'll actually twist it, you know in oh no, that's not what I meant. I meant this, I meant that right, because they know what they're doing is wrong.
Speaker 1:And especially if you look at I mean, look at, you know, some of the people have actually studied Islam and that's the kind of you know the sad thing about it. Right, you have more accountability with more knowledge that you have right, because you should know better, you know. That's why I don't get offended when a layperson says they're a non non-practitioner because that's expected from them. I get more offended when it's a practitioner or somebody they should know better. And look, what areas in fiqh al-Mu'minah do you get consensus on? I mean, we can't even get consensus on what day Ramadan starts or what day Eid is. Yeah, can't get consensus on what type of food is halal. You know like this body is done and understand and so on. In so many areas it isn't.
Speaker 1:And what we know is that there are differences of opinion. There are legitimate differences of opinion as well, and the way that we do our home finance like you mentioned, the Diminishing Masharqa contract is the most widely accepted form of home finance in the country and across the world, globally. Globally for sure, like I said, the likes of Sheikh Nizami Yacoubi, the late Sheikh Abu Sattar al-Quddah, they've approved this concept right, that we're using right now the type of concept we're using right now. And so how can we then say that your niche view, which is an outlier, is actually one, the only halal position available? It's wrong, it's actually irresponsible to get that done and then it's causing fitna. And secondly, you say it's more authentic, and I'll talk to you a bit more about how is it more authentic? And the kind of examples they give. They're erroneous and I'm happy to explain that in more detail later on.
Speaker 2:Yeah, please do. I think, having spoken to a few people on this topic from both sides of it on this show and also outside of this, just privately I really, really believe that the main issue amongst the public themselves is just about cost, cost and convenience.
Speaker 2:I think when people say, okay, I'm a Muslim, let me find an Islamic alternative, they go out there and they look at the orions and the gatehouses and whoever else it might be, and then, they're faced with poor digital services, really long time periods when they're applying for financing, and then, beyond that, something which is often more expensive sometimes two to three times more expensive than a conventional provider and then in their minds they start looking for a way out. Okay, is this really Islamic? Is there a fatwa saying I can go for a conventional instead? But I think if you were to remove those layers and like Marshall there are different people out there, we, but I think if you were to remove those layers and like Marshall there are different people out there we created Kestrel on the basis of making things more digitally convenient for people.
Speaker 2:You did exactly the same with Offer, then I think if you remove that cost barrier as well, I think the rebukes and the contentions from the public just will die. I think they will go away.
Speaker 1:You're spot on. You're spot on. And just to answer the original question, is that one our major challenge? It's not. Our major challenge actually is more about, like you said, just trying to educate the community to understand it better and so we can get more people coming on board, and trying to reduce prices and so on. But this is becoming more of a challenge and the sad situation is something I mentioned right at the beginning that things are much easier today than they were over 20 years ago when we started kind of offering Islamic finance products Because education, alhamdulillah, for Muslims has been getting better and better.
Speaker 1:Education for Muslim scholars and imams has been improving as well and it's becoming more acceptable. You get less kind of questions being asked and the questions or the questions we do ask, are more sophisticated. You know, they're not the kind of really basic questions that we used to be asked before, but recently, sadly, you know, with this kind of trend of, you know, pushing that everything else is not Sharia compliant and this is, it's actually doing the opposite effect and sadly, I can honestly tell you, you know, tell you, mostly for us it's the same story because we come across the same customers. There are people who are actually looking to go for Sharia-compliant finance, who ended up going for interest-based because the so-called new authentic, unregulated home specialist schemes had years and years of waiting times anyway. So they thought, well, I can't go for those because I've been told they're the only ones that are Sharia-compliant, and I would have been happy to go for the standard Sharia compliant products, the regulated ones, but I can't go. I don't want to go there because I've been told they're not halal, so I might as well go for conventional Right, and I'm sure that's.
Speaker 1:No one meant that, even though the guys you know people anyone to go for conventional finance. But that's end result, and what's happening now is, for the first time ever in the last year or so, I've seen the level of education effectively going backwards, and so I think people need to use a bit of Hikmah here, right? What's the purpose of causing this confusion and division? What's the purpose of it? What are you trying to achieve? Right, you haven't got proof that you can sell because the funding isn't available, product's not regulated, and is that the way you want to sell it? Is that the way by calling everybody else not hello, when actually the majority of you is the other way around that all those products are the most authentic out there right now. So, yeah, it is quite sad and it's not a massive problem right now, but if the you know, if this continues, it could be a problem and at kestrel, you know we deal with the public a lot.
Speaker 2:We talk with a lot of customers. We're sensing that confusion. Okay, and financing home financing, particularly in the retail space is the the most desired product amongst muslims in the western world and it has the most confusion around it. People get very passionate, people get very upset about it as well. So I think the sooner we can all come together and just reach a consensus and some understanding on it and just have one singular message that goes out to the public, just the better for everyone in general. So we don't have people who are just going for conventional products.
Speaker 1:Agreed, agreed, and I think this is where I think you know if you've heard me speak to you about this and other practitioners what we would love to do would be put funding into kind of non-branded, just generic Islamic finance training across the board. I used to be a scout leader no way, yeah, muslim scout. Muslim scout in Birmingham leader yeah, uh, no way, yeah, muslim scouts, muslim scouts in birmingham, and actually the largest muslim scouts group in birmingham, which happened to be the second largest scout group of any kind of birmingham. Wow, and one of the things we used to do was, you know, train people on budgeting and so on.
Speaker 1:Kids, right, they used to get badge for kind of finance, but because we're a muslim scouts group, I could add on content about islamic finance as and I remember teaching people, you know the kids were like between about 12 to 14 years old. This particular group were, and I remember the next week, the next session, the parents coming up to me asking me can I deliver the same training to them? And that wasn't to surprise me because, you know, even the UK regulator and other kind of UK bodies have noticed that the level of financial literacy and education amongst adults in the UK is extremely poor and more needs to be done, and so the same will be the case for Islamic finance.
Speaker 1:It's probably worse actually because that information is less readily available. So what we need to do, really, as an industry, is invest more time and money in just creating like with yourself, like with your thing as well, really as an industry, is invest more time and money in just creating, you know, kind of like with yourself, like what you're doing as well, creating resources for educating Muslims, and I'm happy for you know, for all of us, to put money into a non-branding type of training. We're just teaching them about Islamic finance and then once they know about it which product they want to go for which provider.
Speaker 1:that's their choice. But yeah, but going back in what's the trend that I see happening right now isn't helping anybody. It's counterproductive, and the issue is that, look, we speak to regulators all the time, right, no-transcript was the stamp duty. And capital gains tax.
Speaker 2:And capital gains taxes.
Speaker 1:And it's hard to talk to them, you know, because the government and the different regulatory bodies will come back and say well, guys, I've got a lot of work to do from a public body to limited resources, right, how much demand is there for this stuff?
Speaker 1:That's the question. Yeah, how much demand is there? And if it's worthwhile, I'll put my resources there, because right now, my priority is all about the demand that's needed and I've got so much work to do, not enough resources, and we know that's the case with the government, right, and the different government bodies. So we need to create the demand so we can make more changes, right, to make the Islamic finance products better, and you can't do that if less people are interested in it. So what we should be doing as an industry generally is working together to create more demand, right, for people, so that we can create better products. So we can lobby the government and get them to take us more seriously whether it's a regulator, the legislator, the HMT, whatever they are to make those changes that we need to make. But you can't get that done until the demand is there.
Speaker 1:And I think the work that's been done by some people right now. It is counterproductive, and the sad thing is they should know better, right, because they have some Islamic education, some Islamic science education. So that is what I'm very passionate about and it's upsetting. On a separate point and I think that's worthwhile mentioning, I think right now is about the issue of regulations. Why do we spend the last two years spending a lot of time and money ensuring that we get regulated products and also ensuring that other products we offer bridge financing and so on, development financing, refurbishments that they're within the regulatory framework? Why? Because, as I mentioned earlier, the Muslims deserve the same level of protection and the same level of confidence, knowing that we're under the same level of scrutiny as non-Muslims or anybody else who's going for conventional finance. And I'll give you an example of this. So there was you know this, and I won't mention the name of the company, right?
Speaker 1:But you know, sadly, there was an investment scheme recently, right, that was approved by large scholars and so on and which turned out to be a Ponzi scheme, a scam, and Muslims lost. What was it? In excess of 10 million pounds 10 million, yeah, right. And people went and it's an unregulated scheme, right. Why would you invest your money into an unregulated scheme? Right? And also, you have to understand, like we mentioned earlier, scholars mashallah, they are experts in Islam. They are not experts in financial services schemes, right, you know, whether Islamic or otherwise, and that's a fact. Just because a scholar has said, oh, this product is halal or this product is good, doesn't mean that actually it's a safe product either. So you need a combination, freely, ideally, you need to get scholars who are experts in Islamic finance and expertise in financial services.
Speaker 2:Like Mufti Faraz.
Speaker 1:Like Mufti Faraz. Yeah, which is us.
Speaker 2:Yeah, people with those qualifications are kind of few and far between Exactly right.
Speaker 1:That's one. And second thing then, extra protection is is it regulated? How do you know your money is safe? How do you know what's happening to your money? How do you know the marketing material, what you've been told, is correct, when you regulate it, that's all checked right and, like I said, massive fines if it's not correct, including even potential custodial sentences as well, and that's a kind of issue.
Speaker 1:Another issue I would say people they should ask, especially with some of these kind of unregulated home purchase schemes that people talk about, is more authentic, right? I mean, are people aware, are they making people aware, you know that if they take our home with them, that they have to pay double standard duty, right, with a mortgage or with an Islamic home purchase plan? Did you know? Are they telling people that they're having to pay capital gains tax on houses, right, that they're buying to live in? Again, you don't have to pay capital gains tax if you buy a house in cash, if you have to buy a house through a mortgage or with an Islamic home purchase plan. Just to explain what capital gains tax is if you buy your home, just say, for £100,000, and 10 years later it's now worth 200,000 pounds, right, and you sell it, you don't have to pay anything on that that 100,000 pound of profit that you've made, because it's the home that you live in. But with these new unregulated home purchase plan schemes, you have to pay capital gains tax on the 100,000 pounds and it's a massive amount of tax and it's unfair.
Speaker 1:Is that kind of and it's a question I want to ask your viewers, right, you know, if they've come across these schemes or if they're taking other products with them, was that detailed to them, not in fine print, but in very clear text, like we would have to do, like any regulated firm would have to do? You know when, like, like, like we would have to do, like any regulated firm would have to do? You know when, like a financial information statement or offer letter, was made clear exactly what the fees are, what the risks are and so on? Is that being made clear to them? And if the answer is yes, good for them, but you're still paying an unfair amount of money when you don't need to do it, right?
Speaker 1:And I think another thing that kind of really irks me actually, you know'm not sure you know, manage the, the largest number of islamic finance advisors you know, ever you know and kind of I was part of the training competition scheme and so on, you know, in my previous role, and so I, you know, I tend to know, I probably know more about islamic finance, property advice, than probably anyone in the country right now. And what does irk me and I've spoken to sculls about this, as is where one of the things that some of these non-regulated you know, non-regulated home purchase plan schemes kind of talk about what makes a product more authentic, is that, oh, they say, oh, we don't have an obligation for a customer to buy the property right, so people could effectively be renting a property.
Speaker 1:Yeah, but they don't. But let me just go to the final print, right? I want to know how this can be explained to people. So, if you take out a property right now, and what?
Speaker 2:they'll say to you is.
Speaker 1:I'll just make up some numbers. Your rent is 600 pounds a month, for example, right, and then you know your portion to purchase a property, right, just say it's not 600 pounds for argument's sake. You say similar to us. Let's say, yeah, but at any time you can stop paying that portion of buying the house, there's no obligation to buy. But are they telling you your rent then increases right from 600 to, I don't know, I can't remember what the rate is, but let's say 800 pounds a month and they call that oh, we've taken away the discount.
Speaker 1:That's not a discount, guys. If that was a regulated product, what's that? Seen as a penalty, right, and I would never offer that as an, you know, as a product, right, because that's a penalty, for goodness sake, that you're charging people and it's, it's a. Honestly, I don't want to use the word right, I need to hold back, you know, in my true feelings, because I don't want to get too controversial, but that is genuinely upsetting for somebody who gives, you know, who used to give advice, right on these areas. How can you sell that as a product? Are you making it very clear to them what's going to happen if you don't do it and the fact that it's not a discount they've removed. I mean, it's quite perverse. Actually, they swapped it around, you know, by saying, oh, it's a discount we're giving you, we'll remove the discount. No, the rate is 600, right, and the other 200 is a penalty, not a removal of a discount. But also, what happens is they say, oh, if you can't even pay the rent or element of it, we're going to check the rent out of the equity of the property, but at what rate? At the higher rate of the 800 pounds, not the 600 pounds. Honestly, this is such an unfair situation to be in for customers.
Speaker 1:And the problem is that these, because they're not regulated, they are not providing financial advice Now, I told you before are not providing financial advice. Now, I told you before, what did the mortgage market review by the regulator come back with? Over 90% of customers are not financially literate enough to choose a mortgage product. Now, it's unregulated. Home finance schemes actually are a lot more complicated, right? So if they need advice to choose a mortgage product, you definitely need advice on these more complicated, unregulated products as well.
Speaker 1:But they're not getting the advice. Yeah, and recommendations about how much to take out, what products you should go for what terms you should go for whatever, and are they being, you know, at this level of intricacy being explained or not? So I remember speaking to some people, including scholar one day said, even if I offer that product Right, which I don't agree with, if I did I would never advise him to take that element of it out. Right, there is a wrong thing to do and you can see they face off as somebody who's in the financial services, right, so it does.
Speaker 1:That does upset me, because why are Muslims falling for these tricks, yeah, and and Sadly it keeps coming back to oh, because these scholars have said it's better, and so on and so forth. But if it's that good, why is it being regulated? And also, I came across a podcast where someone said if a product is regulated, it's effectively synonymous it proves that the product isn't Shirek combined.
Speaker 2:Now. I'm sure you could cross that line as well. That wasn't one of our problems.
Speaker 1:No, it wasn't one of our problems, I'm sure you're not, I wasn't expected to know that, but I'm hoping that person that said it didn't mean it that way at all. I'm hoping that it was a kind of mystique. But how irresponsible is it to say that? Right, because a lot of the parts of the regulations are actually part of this. They inherently sank anyway. A lot of them are.
Speaker 1:If anything, some finance takes it further right, but consumer protection, the hegemonic regulations and that reminds me why would you say that that proves that it's not juridical. It's the opposite. I think this is where we need to be smarter and more sophisticated with it and not fall for scams, not be naive in falling for this kind of quick marketing ads or some influencers or some scholars who don't know anything about finance giving some views. They need to do property diligence and ensure that the firms that they are taking these influencers or some scholars who don't know anything about finance giving some views, right. They need to do property diligence and ensure that the firms that they are taking these products out with have the relevant regulations in place.
Speaker 2:Sure, sure, the only thing which comes to mind. I had a conversation with the CEO of a large Islamic bank in this country Sure.
Speaker 2:But kind of joking around and sort of said well, you know, technically, the financial services compensation scheme, that protection that we provide on people's offers within banks, that's not Sharia compliant. I said what do you mean? He said well, because you can't guarantee anything. And he said you know. So if people were really really focused on Sharia competency, they would you know forgo the. Were really really focused on Sharia compilacy, they would you know foot go to the right to that FSS protection. That's the only thing where it comes to mind when I think, oh, you know, being regulated makes it.
Speaker 1:So that has to do with savings accounts, isn't it?
Speaker 2:Yeah, yeah.
Speaker 1:That has to do with savings accounts, okay. So just going back in that mind so there is a view that's like that, but if that was the case, you don't have to take the money. Yeah, that's true. Right, you don't have to take the money, right, so you're not forced to take the compensation. Right, the compensation is in place but you're not forced to take it. It's the same thing. Going back to the kind of adoption we're talking about right, there's options. If you do it in this particular way, yeah, in a view, in a particular view, you might be not share compliant, but you don't have to take it, right. So this is a yeah. Unfortunately, that argument for me just doesn't stick, it doesn't wash.
Speaker 2:It doesn't wash at all, absolutely Okay. Well, thank you for being so candid in your response there. I hope that in the future we can have, you know, more constructive conversations like this with different players in the industry, and I want to shout out Umar Falil, who's a longtime friend of the podcast. He's done a couple of episodes with us. He's the founder of River Free Foundation. He's doing a lot of good work bringing all the industry players together and getting that one single narrative out to the public, and I think they're doing fantastic work. So everyone should please go check out River Free Foundation and what they're doing there.
Speaker 1:Now 100%, and I'll add that yeah, I think I did mention it about 3LEI and that's the kind of organization we're saying you know that. You know we're happy to give funding to, ultimately, and everybody else should do where they can give non-branded training on Islamic finance, you know, to just educate people on what Islamic finance is.
Speaker 2:Exactly, exactly. I think they're going to do it. That's right. So let's look at the future. Yeah, what does the future hold for? Because right now you're for buy-to-let, you're for bridge financing Are retail mortgages on the?
Speaker 1:cards. Yeah, sure, so we offer buy-to-let bridge financing and different types of bridge financing, some development financing, kind of refurbishment and so on as well. But yeah, as I mentioned, we were the first firm in over seven years to get you know the UK regulation for Islamic finance, which means we soon we're developing for right now which will allow people to buy homes to live in and fully regulated with advice and so on. Also, I mean, we're in the middle of launching five products this year. It's an extremely busy year product ever launching in one go, ever. Hence why we're doing a big recruitment drive. So I would say, you know, for any talented people out there looking for jobs, go on our website, you know, follow us on linkedin so you can see the different jobs coming out. Um, but yeah, you know, another product we're launching kind of effectively can't launch, but we're doing a proper launch soon.
Speaker 1:It's a bridge to let as well, where somebody to want to buy a property, um, you know, on a bridge they can get the, the rent, the exit with the rental with us to buy, to buy a property on a bridge they can get the rent, they can exit with a rental with us, a buy-to-let with us immediately, and it's actually because we're doing it as one product. Overall it works out way cheaper than if they were to take out two separate products one bridge and one rent. The admin fee's lower, the solicitor fee's lower, the kind of valuation fee's lower, but also, most importantly, the solicitor fees are lower. The kind of valuation fees are lower, but also, most importantly, the length of your bridge is way shorter. Oh really, right. So instead of having like minimum six months other providers, you can have a smaller one month, two months, three months, right, and that's not really the really expensive part of it. So, having the bridge to let the seamless one, so that's coming out imminently.
Speaker 1:But there's other products that can't really talk about. That. They're all coming out this year. Okay Now, as you probably know already, we were involved in purchasing the first people ever to purchase an Islamic finance book from Al-Burak, you know, which was owned by the Bank of Ireland at the time, and so that was through an acquisition, you know, where we were able to onboard over 350 customers and actually, finally, enough, I was actually part of the team that you know, and it's a brutal time, but me and Mo on the cold phase where we were the first ones to bring these customers on board for Al Barak in when I was part of Islamic Bank of Britain, so it's quite nice that we've been able to bring them back home now yeah, yeah, yeah.
Speaker 1:So our group plans are to kind of to be already.
Speaker 1:Inshallah, you know, especially when some of the products are launched, they'll you know be offering the widest range of Islamic property financing in the UK and as we kind of continue launching more property financing products, that will continue to make our claim stronger. But our future growth is also to go into other products that are not just purely property finance related, maybe other asset based products and also through acquisitions. So other acquisitions like we talked about, including growing through acquisitions. So other acquisitions, like we talked about Albarac, including growing through acquisitions of other companies as well.
Speaker 2:Really Okay.
Speaker 1:And so that's again. Can't go too much into it, but that's the plan. We want to grow as quick as possible, be over a billion in assets very, very soon, and we want to do that through acquisitions as well as organic growth.
Speaker 2:Inshallah, amazing. May Allah bless you for your efforts and help you further this. What about? A savings account a retail savings account. Is that something Not at this stage?
Speaker 1:no, Not at this stage. I mean, we're funded well already through our shareholders and through other kind of Our funding from top end. Is Shurea compliant in terms of how we get the funding and how the customers get it, Unlike some other providers in the country, we're proud to say that our journey from beginning to end is fully Sharia compliant, so we're okay with that for now. Going forward savings account we don't have that in the short term, but you never know. I would say you never know Because we were amongst the first ones to launch in Islamic savings.
Speaker 2:Yeah, exactly, amongst the first ones to launch in Islamic savings. Yeah, exactly, and I think for us it's like the second or third most requested product behind colleges is a way in which people can grow their money in a Sharia-compliant way, and property is a very exciting way of doing that for a lot of people, exactly. So, coming up to the final two questions, we'll have to end soon to get ready for Jummah. Thank you. So, firstly, why is it so important for Muslims to get into the property market? Do you feel that's important for people or do you think it's kind of overplayed and we've kind of had this love affair with property for a long time in the Muslim community?
Speaker 1:Yeah, no, I think it's extremely important, you know, I mean, look at the foreign investment we're getting in the UK to the property, right?
Speaker 1:I mean UK, alhamdulillah, has got one of the most mature and stable property markets in the country. There's a shortage of homes, it's an island and basically property prices just generally, if you look at historically, are just going one way, and it's quite important for Muslims to own a home to live in. I think for a sense of security, especially with this rise of Islamophobia that we're seeing in the UK, it's even more important that Muslims have their own homes ultimately. Also, what it seeing the UK. It's even more important that you know Muslims have their own homes ultimately, and also what it does is it kind of protects you from property inflation, right? So if you bought property, you know straight away, five years later, all the other properties are more expensive now, but yours has gone up in value as well, right? So therefore, when you sell it, that kind of pain of buying the more expensive property isn't a bad thing, of course, because of the value of your own asset has increased Exactly right.
Speaker 1:So I know a lot of people where their first property actually isn't a property that they want to live in. It's actually a place to live because they protect themselves from the inflation.
Speaker 2:And we offer that by the way as well.
Speaker 1:We changed our criteria recently to allow first-time buyers to do that. We have so much interest in that we're not ready to say look guys, I'm not ready yet, I'm not married, I'm not ready yet to buy a property to live in, but I want to protect myself from the property inflation, so I want to buy a property, let that grow in value, and so we changed the criteria to allow that to happen as well. So I think yeah, for various different reasons. I think property is actually from our research that we've done and I think from your research as well is an asset class of choice for Muslims in the UK yeah, it is.
Speaker 2:And that criteria for the buy-sell-up mortgage, that sounds very exciting. I know a lot of our listeners will be interested in that. Can you talk about some of the criteria, you know, minimum deposit size, salary, what might that be Very easy, I mean look, minimum deposit is 20%, which is amongst the lowest you can get for a bike in the country.
Speaker 1:The minimum salary requirement is only £18,000, which is actually below minimum wage effectively. So kind of anyone can effectively be eligible to get it out. And then you know, first-time buyers are able to take it out. They can even take out normal bike alerts. You know, on a limited company structure. They can even take it on HMO. You can even have British expats actually who live abroad who want to buy in the UK. They can do that.
Speaker 1:So, it's a very wide range of perks we offer to quite a lot of people, and the British residents don't even have to be British citizens, you know. So they can be people who've got residency in the UK. They want to take out a bike and they can. That's incredible. And the other thing is you know the way that we do affordability criteria. The documentation as a tool is quite easy, you know we made it simple.
Speaker 1:So a lot of our customers in London, especially the rental yields, aren't high to meet. Now I won't go through the intricacies, it's quite easy. If they go on our website, wwwalphadacodauk, there's calculators that will tell them. Now if their rental income in property in London, for example, isn't enough to hit the requirements for us for affordability, that doesn't mean they can't take out the finance. What we do, which is quite unique, is we allow something called income or top up. So where there's a shortfall of rental income, we will take into calculation their personal income. So if they really want to buy property, especially the ones in London, their yields are weak but the appreciation is good, we will still let them do that.
Speaker 1:Also, I think the uniqueness with what we offer within the conventional and Islamic world is something called gifted equities. Obviously, gifted deposits is standard, right? You can't even want to deposit. Get it from a sibling or get it from a parent, no problem. What we offer interestingly is if you imagine your dad's got a property worth 200k, he says I'll sell it to you for 100k. You come to us, right? You have no banks in the country and Islamic bank providers.
Speaker 2:They will say, all right fine, Some will say yes, some will say no.
Speaker 1:If they want to say yeah, we'll let you buy that 100K, say we still need to put a 20% deposit down. We'll say no, actually, all right, you've got 50% equity already. It's worth 200, you're getting it for 100. So you don't need to put any deposit down and the rate we're offering you is of a rate with that level of deposit, so you get the lowest rate product as well. So we allow effectively gifted equity is what we explain. It gets very unique in the market and very, very popular with our Muslim customers.
Speaker 2:How are you location agnostic? It's anywhere in.
Speaker 1:England and Wales, not Scotland yet, unfortunately and we were the first people, by the way, to launch on finance and commercial property finance in Scotland Scottish law is different, so our contracts have to be redone to comply with Scottish law. So our plans are to move into Scotland next year, inshallah For sure. So watch that space, but for now it's available anywhere in England and anywhere in Wales.
Speaker 2:Okay, so your final question for you. Is there a story about money from the Quran, the Hadith or just Islamic history? We talked about King Arthur already, but is there something that's really inspirational to you?
Speaker 1:About money. I mean, there's so many to talk about. You know, when it came to charity I think there's and I forget the name of this Sahaba now where it was after the Prophet passed away, I think and he was a very rich Sahaba and he brought in. So the Sahabas came out and they could hear an earthquake almost right in Medina, coming in right, but what's happening? It felt like an earthquake in Medina. They looked at it, it wasn't an earthquake, it was a caravan of goods coming in and these goods were all owned by this one Sahaba. His business had done so well, right, and unfortunately I can't remember the name of the Sahaba right now, but he basically had bought in so much goods that it was almost like shaking the earth. And then he kind of spoke to other Sahabas and found out what he was and how well he'd done, and he found out Some of the needs that people had. And what he decided to do was he decided to give the whole amount, everything, everything, you know, Of his biggest caravan To ever come into Medina. He had just given the whole thing away To charity. Ultimately, right, and I'm sure, and that's just an an example of some kind of generosity, you know and you know Mashallah, he was a wealthy man and he still gave a lot away and having the taqwa to know that he will get richer right at the back of it. He's not going to get poorer because of it. He's an amazing one.
Speaker 1:But I think a different ayah from the Quran, that is quite. It isn't necessarily linked to money, but there is a link you know, especially with my life and others is from Surah Al-Imam, in Ayah 139, which is so do not become weak nor be sad, and you will be superior if you are indeed true believers, and that you know. If you look at my WhatsApp, you know stages. It's been like that for years. It's a reminder for me always. It's a reminder for other people if I speak to them, right, and I've been through a lot of changes and issues you know throughout life, including when it comes to money as well, especially when you're getting a hard time, for maybe you know, at the community or your family. You know, and and you know about money, for example, right, you know why. Why don't you kind of take on a bigger pay rise and so on? And this is a good reminder for me, right to to to stay strong, not to be sad, not to be weak, and obviously it can be applied to a lot of what's happening. And for me and it's a personal example I talk about the first time I came across something like this wasn't actually the IR, but the lesson, and it was from my dad.
Speaker 1:So when I was in my school days I was diagnosed with ADHD, doctors tried to prescribe me medicine. My dad was very against it and that's something he taught me about firstly. Firstly said don't be sad, yes, and says listen, weakness, you know, and having an issue doesn't make you weak, all right, but feeling sorry for yourself and giving into it, that's what makes you weak. Right, so you could have one leg, one arm, that doesn't make you weak. But giving into it, the sadness, you know the grief, you know the depression and whatnot. That's the weakness. So, don't be weak.
Speaker 1:And throughout my life I came across that with friends for very different things and so on.
Speaker 1:And now I can say no, never been, never, probably be medicated for adhd. Russia, not 90 meds, and if anything, it's um, it's been a strength for me, yeah, it's been a strength for me when I've even um wanted to adopt and so on. Right, because it's been a strength for me. It's been a strength for me when I've even wanted to adopt and so on. Right, because it's like you understand this other thing's better than most. But it's also been a strength in terms of the way I work, the level of energy I have, mashallah and so on. So I would say, and it's helped me throughout my whole life in various different my favourite ayah of the Quran is that is not any weak and remember that you will be successful if you're a true believer, and that's where the wakil comes in. The same with giving the money to charity and so on, and that's there, totally linked to Islamic finance or money. But there has been a link for me, but on a greater scheme.
Speaker 2:That is my favourite ayah of the beautiful way to end this episode, exactly. So thank you so much for your time. Thank you for listening to the muslim money talk podcast. If you like what you heard, then please subscribe to muslim money talk. Wherever you might have been listening to this, give us a like and share it with someone who you think might be interested. It really, really helps us out. Thank you, assalamu alaikum, and see you next time.