Education in Islamic finance in the United Kingdom is growing in popularity because the industry is perceived as more ethical than the West’s traditional finance sector.

Since the global crisis, many people have been questioning whether capitalism can survive as some of the world’s biggest conventional banks have been revealed to have tried to rig money market rates.

Training in Islamic finance is appealing because the sector places a high value on ethical investment and appears to have a strong moral philosophy. For some, Sharia-based finance offers commonsense solutions and more security – because it has to be asset-backed – than conventional banking systems, where the derivatives and commercial mortgage-backed securities scandals started.

The ethical lapses that occurred in the financial sector are prohibited in Islam, which outlaws risk and gambling. The crisis consequently highlighted the resilience of Islamic banks.

At Aston university in Birmingham the masters in Islamic finance course encourages students to think about ethics in every module, be it accounting, contract law or conventional finance modules.

Thomas Woods, who is currently an intern at BLME bank, which has offices in London and Dubai, is studying for a masters in Islamic finance at Durham University, after completing an undergraduate degree in Arabic and Middle East studies. “Islamic finance provides an alternative financial system with an emphasis on ethics to include transparency and fairness in all financial transactions,” he says.

“A viable alternative to conventional finance that has demonstrated sustained growth captured my attention, particularly when viewed in the current economic context: a recessionary environment in the United Kingdom and a euro-zone crisis,” he says.

But Harris Irfan, the author of Heaven’s Bankers: Inside the Hidden World of Islamic Finance and managing director at EIIB-Rasmala, a boutique investment bank, says he is concerned that western practitioners of Islamic finance are merely “reverse engineering” conventional banking techniques to make them Sharia-compliant. “An emphasis on the letter of the law over the spirit of the law has left the layman confused. With a global Muslim population of 1.6 billion, much of it under-penetrated by financial services, surely the time has come to emphasise broader ethical principles over adherence to arcane contractual mechanisms?” he says.

If Islamic finance in the West is to truly embrace an ethical dimension and not merely follow what European bankers did in the Middle Ages (to get around the Christian church’s ban on usury), university courses must have a strong ethical dimension, Muslim scholars have argued, Mr Irfan says.

Still, the message that Islamic finance offers an attractive alternative financial system is already getting through to those who want more ethical banking systems, regardless of religious background.

The Islamic Bank of Britain, which recently launched the UK’s first Islamic ISA estimates that about 87 per cent of new applications for fixed-term deposit accounts are from non-Muslim customers.

Instead, ethical savers and investors are using Islamic banking as a way to ensure their values are reflected in their financial decisions.

business@thenational.ae

Follow The National’s Business section on Twitter