‘Use caution with Islamic financial institutions’

National 1 minute, 55 seconds

BANDAR SERI BEGAWAN

CONSUMERS should be careful and knowledgeable when dealing with financial institutions even though they are Islamic in name, said a scholar from Universiti Islam Sultan Sharif Ali.

Professor Dr Mahmood Mohamed Sanusi, a professor from the Faculty of Business and Management Sciences at the Islamic university, gave the advice during a talk entitled “Does the Islamic Financial Institutions Customer Need Consumer Protection?”

“The protection of consumers is an important matter that should be taken seriously,” said Professor Dr Mahmood, adding that the practices of some Islamic financial institutions should be taken into consideration. The situation is not unique to Brunei, he said, but throughout the region.

He said that while various aspects of financial institutions, including Islamic ones, are questionable, the financial products they offer should provide some insight into whether their practices are Syariah compliant.

Claims that their practices are according to fatwas should not satisfy the consumer and may only be a form of marketing to draw consumers into practices that may lack Syariah compliance.

“The contract which spells out the relationship between the consumer and the bank will show how genuine their business is,” said Professor Dr Mahmood, adding that defects with some Islamic banks are in their legal documentation whereby they “do not distribute justice between parties”.

He said legal documentation must be Syariah compliant so that the terms of the contract and the price will be fair and equitable to consumers.

During the course of the talk, he also shared complaints from both Malaysia and Brunei that involved consumers having to deal with issues of Islamic financial institutions in civil courts.

In conclusion, Professor Dr Mahmood said Syariah scholars face a major challenge of having the Islamic financial industry accept that not all forms of conventional instruments such as options, futures and derivatives can be made Syariah compliant despite being practiced in the financial market.

“Once conformity to the Syariah is achieved, the legality of an Islamic bank’s financial products will not be a contentious issue nor be doubted by Muslims,” he said.

The talk was held yesterday at UNISSA’s Jubilee Hall.

Professor Dr Mahmood has published works in reputable academic journals, including the International Journal of Financial Services, Arab Law Quarterly, Journal of Money Laundering Control (Cambridge University) and _IIUM Law Journal_.

The Brunei Times