Muslim financials

Now this is an interesting one – not strictly a franchising story but it’s been receiving attention from the whichfranchise.com service and will affect many within the franchise community so it’s relevant. Lloyds TSB has launched a Muslim bank account which complies with Shariah law. Among the rules are that businesses as well as individuals should neither charge nor receive interest, there should be no investment in gambling or alcohol and other strictures, for example.

I’m not a Muslim and would claim no expertise on the subject. Indeed I’d welcome the diversity this suggests.

I’d just query, briefly, how far you have to go down the Lloyds TSB food chain before you come to something that’s going to offend. I’ve recently turned 42 so I remember the sanctions against South Africa during Apartheid very well indeed – you just tried to avoid buying South African goods in order to bleed the racist regime dry. Long-term, it worked. The thing you really, really didn’t do, though, was to bank with Barclays, the only High Street Bank with South African interests.

At least, so the publicity said. Barclays, meanwhile, was more than a little bemused. By all means you didn’t have to bank with them but to suggest that another bank was less interested in South Africa was either naive or plain inaccurate, they suggested. They may not invest in the country directly but their indirect interests had the Cape written all over them, they said. It was more complex than it first appeared.

My concern is that the same is almost certainly true of the Lloyds TSB case. Yes, the services and rules of the accounts on offer will comply with Shariah law – the bank has enough experts on board to ensure that’s the case. But has the launch and the publicity surrounding it – and the research and development that went into the product – been funded exclusively through Islamic means, or if you go down the food chain a couple of steps do you start to find standard Western means of finance propping this project up initially? My educated guess says yes you will. In advance of the accounts being put in place the staff behind them and the maintenance of the cash points can’t have been paid for through this new Islamic means.

And if the product runs into trouble will it be bailed out by non-Shariah finances? In principle, once again, the answer is almost certainly ‘yes’, although in practice the demographic the accounts will service are among the least likely to cause a bank any financial difficulty so it’s unlikely to arise as a real issue.

In principle I’m very much in favour of this idea that supplements the diversity of this country. A great many of the account holders will be in the franchise community so it’ll have quite an impact. To what extent it’s a marketing as opposed to religious or ethical move I wouldn’t like to say.

Guy Clapperton is a freelance journalist who specialises in small business issues and has written for the likes of The Guardian, the FT and the Daily Mirror. Guy has written about finance and franchising for SmallBizPod. http://www.guyclapperton.co.uk