* To focus on Malaysia, then expand globally
* Currently has over 60 members
* Will launch financial literacy test this year
* Accreditation will be points-based system
* Body could reprimand scholars violating code
By Bernardo Vizcaino
DUBAI, Aug 15 A fledgling industry body of
Islamic scholars wants to develop a global code of ethics and a
professional development programme for scholars, in order to
improve standards in the industry, its president told Reuters.
The plan takes aim at a weakness in Islamic finance which is
slowing the industry's growth. Boards of scholars at financial
institutions rule on whether instruments and activities obey
religious principles, but there is no single, commonly
recognised set of qualifications for the scholars.
This has fostered confusion when scholars' rulings
contradict each other. And because scholars are paid by the
institutions whose products they vet, the industry is open to
accusations of conflicts of interest.
The Malaysian-based Association of Sharia Advisers in
Islamic Finance (ASAS), set up in April last year, plans this
year to launch a test for the financial literacy of scholars,
and ask its members to sign up to a code of ethics; if they
break the code, they may be reprimanded by ASAS.
Both initiatives will initially apply only to Malaysia but
the group aims eventually to extend it around the world, said
Malaysian-born ASAS president Aznan Hasan, a scholar who sits on
several sharia boards across the globe.
"We want to have a programme that can have an impact on the
industry," Hasan said by telephone from Kuala Lumpur.
ASAS, which currently has over 60 members, will offer
guidance on issues such as how to appoint sharia boards and
address potential conflicts of interest, he said.
The financial literacy test will form the basis of an
accreditation programme that could start as early as the first
quarter of next year, aiming to encourage the professional
development of scholars through a points-based system.
This would address concerns that some scholars "may be
static in terms of their knowledge", said Hasan. "If we are not
careful, someone who claims to be a scholar could give wrong
ASAS members will be able to earn points towards their
accreditation by enrolling in training courses offered by
regulatory bodies, private providers or ASAS itself.
The body plans to build its membership of scholars on a
voluntary basis in the first two years, and then propose that
membership becomes compulsory for all scholars in Malaysia from
2015 onwards. Although its initial focus will be Malaysia, it
aims eventually to have an international footprint that could
encompass all sharia scholars.
"We need to lead by example first," said Hasan, adding that
it would be difficult to persuade other countries to join
without proof that the system worked.
ASAS will offer a venue for discussion and be proactive in
shaping the role of scholars in the industry, Hasan added.
Malaysia's securities commission is also considering the
possibility of developing an accreditation programme for Islamic
scholars, but this is only at the exploratory stage and could
take no less than three years, a source involved in the
discussions told Reuters.
If ASAS's accreditation scheme spreads globally, it could
help to create more uniformity and consistency among sharia
boards' rulings and in standard-setting for the industry.
Currently, standards set by industry bodies such as the
Bahrain-based Accounting and Auditing Organisation for Islamic
Financial Institutions are enforced in some countries in full or
in part, while others use them as a reference.
"Regulations come in many different ways; some are lenient
and some are structured," said Hasan, who among other posts sits
on the sharia boards of the Malaysian central bank and of Dar Al
Istithmar, the firm which advised Goldman Sachs on its
controversial plan, which has still not gone ahead, to issue a
$2 billion sukuk.
(Additional reporting by Anjuli Davies; Editing by Andrew