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The global Islamic finance industry has enjoyed exponential growth over the past few decades, and the regulatory underpinnings of the sector can provide much food for thought for the wider responsible finance industry. In recognition of this fact, the Global Ethical Finance Forum (GEFF 2015) will serve as a platform for historic discussions on what Islamic financial governance can help address ethical lapses in the ethical finance industry.
Globally renowned experts from leading organizations such as the Islamic Financial Services Board (IFSB) – the premier standard setting body in Islamic finance – Al Rayan Bank, HSBC Amanah Malaysia, European Islamic Investment Bank (EIIB-Rasmala) and Ernst & Young will engage fellow ethical finance leaders as part of GEFF’s mandate to bridge the disconnect between Islamic finance and the rest of the ethical finance universe. During the highly anticipated panel discussions, experts will review the established regulatory infrastructure in Islamic finance, its resilience and unique governance structure, and its effective role in safeguarding the industry from both the financial crises and negligence in ethical standards.
Broadly, the responsible finance industry exhibited strong resilience in the recent 2008-9 global financial crisis, a factor leading to its rapid growth over the years. However, the recent crisis concerning the Co-operative Bank, one of the UK’s largest ethical banks, and several other incidents revealed that the industry is prone to ethical lapses, not just financial. So how should the industry go about addressing such shortcomings? Where should it look for inspiration? Perhaps, some argue, there lie many lessons from Islamic finance, which as a corresponding subset of the ethical finance industry has exemplified a robust regulatory framework possessing a strong reputation for safeguarding ethical policies.
The resilience of Islamic finance has been attributed to its advanced regulatory infrastructure, which has provided the industry with strong foundations to build a promising future. Independent bodies like the IFSB and The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) are at the forefront in crafting standards to steer clear the industry from financial crisis and ensure conformity to its core values. Islamic finance also possesses an intricate multilayered supervisory structure comprising of the Shari’a board in addition to the board of directors. An internal Shari’a audit system further strengthens the structure and this ensures strong compliance and strict adherence to principles.
The regulatory infrastructure of Islamic finance will further be explored at a high profile panel lead by Harris Irfan, author of “Heaven's Bankers” and Managing Director & Head of Investment Banking at EIIB-Rasmala. Other prominent experts will include Daud Vicary Abdullah, President and CEO at International Centre for Education in Islamic Finance (INCEIF), Rafe Haneef, Chief Executive Officer at HSBC Amanah Malaysia, Dr. Nasir M. Ahmad, Partner at Ernst & Young LLP and Advisory Board Member at The Islamic Finance Council UK (IFC), and Sultan Choudhury, Chief Executive Officer and Director at Al Rayan Bank.
Speaking ahead of the forum, Mr. Irfan commented on the tremendous growth opportunities that Islamic finance presents and the possibility of its strong governance structure as a blueprint: “Shari’a compliant financial assets of just under $2 trillion comprise only a small fraction of total global financial assets, and yet Islamic finance has the potential to represent at least a quarter of the planet’s population.” In reference to GEFF’s bridging role for the industry, he continued: “The ESG industry is an order of magnitude larger and – with some notable variations – broadly reflects the universal ethical values to be found in Islamic finance. Although ESG appeals to a broader audience, Islamic finance has an inherent and well developed governance system that strengthens its economic model and assures transparency and robustness for its customers. .”
GEFF 2015 will take place on the 1 and 2 of September at the prestigious Balmoral Hotel in Edinburgh.
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