Provider of Islamic finance believes it can be beneficial to wider society
A provider of Sharia-compliant Islamic finance has described the challenge of bringing a new form of lending to the UK and the task of educating borrowers about how it can be beneficial for society. Sagheer Malik (pictured), group chief commercial officer and managing director of retail finance at Offa, said the provider even faced a backlash from some in the Muslim community.
With 3.8 mn Muslims living in the UK, Malik passionately believes that they should not be excluded from accessing finance due to their faith and ethics. “Bringing something completely new to the market, Islamic home finance, has been a major challenge,” Malik told Mortgage Introducer. “This has meant trying to educate the general public about how Islamic finance can be a great force for good in society. Being Sharia-compliant means not charging interest and not investing in sectors deemed harmful to society such as the arms trade, animal testing, gambling, alcohol and tobacco.
“There was an initial backlash from some members of our own Muslim community who did not realise that these were truly Sharia-compliant financial products with no interest being charged, but we overcame that by consulting scholars to confirm this was the case. There is still more work for us to do on education the community, however it is much better than it was in the early days.”
He continued: "We are providing a service for Muslims who could otherwise be excluded from having access to property finance. However, it is not only Muslims who benefit from this. We have also found that other non-Muslims are highly attracted to our ethical stance, indeed 44% of our bridge finance customers are non-Muslims.”
Another challenge Malik identifies is creating financial products which can compete with conventional finance. “We have overcome that at Offa with a modern, tech-led and paperless approach. In traditional Islamic finance, modernity and innovation are often viewed with suspicion, so patience and education has been crucial.” he said.
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Unlocking equity and providing generational wealth
These are exciting times for the business that Malik is leading. Offa has recently received FCA authorisation to provide a home purchase plan (HPP) - the Islamic equivalent to a mortgage – and launched its new Sharia-compliant bridge-to-let product - a combination of its ultra-fast bridge finance with its paperless buy-to-let (BTL) product. “Acquiring bridge and BTL finance separately can take many months, but by combining both simultaneously, our bridge-to-let can provide finance within weeks instead of months, depending on credit rating and risk criteria,” he explained. “This allows aspiring landlords or seasoned property investors to buy and upgrade below-value properties, releasing equity. Our bridge-to-let is the first financial product of its kind in the Islamic finance sector, allowing both Muslims and non-Muslims to save huge amounts of money, unlocking equity and providing generational wealth for their families.”
As one of the most experienced Islamic property finance executives in the UK, Malik began his career in Islamic finance more than 20 years ago at the first Islamic bank in the UK, Islamic Bank of Britain, later known as Al Rayan Bank. “I got into financial services because it was my first job straight out of university,” he recalled. “It was a junior role but the interview process was for a more senior role, because they saw potential for rapid promotion. I found the role really interesting because this was the first bank of its kind in the West. It was also the first time in 50 years that a new bank received a banking licence. We were on a mission, pioneering something new, and it was in line with my own faith. My first exposure to the financial industry was extremely positive and I knew this was what I wanted to do.”
Malik has extensive experience in retail banking and specialising in asset products such as HPP, buy-to-let, expat, bridging finance, premier, and overseas HNW home finance. He has built, developed, and overseen direct, intermediary, business development channels, and an operations team that has originated more than £1bn of home finance. “I have learned not to try to do everything, not to try to sell every product,” Malik shared. “It is far better to focus on particular areas and make sure you are extremely good at that. So at Offa, for example, we focus on speed, modernity and high-quality service whilst also being Sharia-complaint. Now we’ve got that right, and we have many happy customers, we can start to expand into other areas.”
Key to all of this, it seems, is the finance provider’s intermediary relationships. “Offa’s relationship with brokers is extremely important,” Malik emphasised. “In fact, the majority of our business comes from them. I was an Islamic home finance adviser myself, equivalent to a mortgage adviser, so I am in a good position to give advice. I would say it’s best to make sure you are reliable, consistent and honest with customers, making sure you always follow up with them, and being aware of everything that is happening in the market. That means knowing the criteria of the different providers, building a relationship with underwriters, and getting a good reputation with them so that they trust you. If you get all of that right, then you submit better quality cases. Also, networking is hugely important. Build up relationships with estate agents, lawyers and other lead providers. Make sure you’re well known in the community so that people come to you for advice.”
He added: “Finally, it’s ideal to build your own niche. For example, most mortgage advisers don’t have permissions from the Financial Conduct Authority (FCA) to advise on HPP but this is a great niche to build. You could be among the few brokers out there who can advise on an Islamic HPP, which is an under-served niche.”
