Every time I receive MCCA’s newsletter with my shareholder statement, I expect changes to the board of directors. Sure enough, this time, there was an announcement of a new board election. They officially have more leadership churn than post-war Iraq.
There was also an announcement of a new financial service, Tamleek. Tamleek is an allegedly shariah compliant home finance scheme based on the principle of ijara muntahiya bit-tamlik.
Tamleek has been developed in consultation with re-known [sic] international Islamic finance scholar Dr Mohd Daud Bakr and endorsed by reputable Shariah advisor in Australia, Dr Ibrahim Abu Muhammad.
With all respect to those scholars, many of us are just not convinced of their authority in Islamic finance. To paraphrase Marshall Bruce Mathers III, won’t the real shariah heavyweights please stand up?
It continues.
MCCA has formed important partnerships with a private funder who facilitates unlimited funding. The funders are non-banking institutions.
MCCA acts as the financial intermediary who brings the investor/financier and the member together. The funding facility has been duly considered by a body of Islamic scholars and they have agreed that this new finance facility adheres to the requirements of Shariah.
MCCA is trying to attract customers who are concerned about funds from a banking source. This is a Good Thing.
But in doing so, they’ve enlisted a private entity whose source of funds is entirely unknown. Not to worry, though: an anonymous body of anonymous Islamic scholars approves. Anonymously.
Apart from the lack of transparency, this is not reassuring on any level. Can this private funder be trusted? If they pull out, could it put the future of Tamleek or MCCA at risk?
But this is the best part: Tamleek offers up to 10 years fixed interest profit rates. The profit rate is based on “operating and management costs, cost of funds, dividends to members, [and] community fund allocations”.
My knowledge of Islamic finance is as limited as the next guy’s, but this seems, to use a technical term, pretty dodgy. Of particular concern is the ambiguity in the total contract cost and the variable nature of the profit rate. Terminology aside, how is Tamleek any different from mortgates with variable interest rates? There seems to be no difference in practice.
This is not a condemnation of MCCA’s Tamleek. Ultimately, a recognised authority in Islamic finance must review the Tamleek contracts before any judgement is made.
This is a call to MCCA to lift their game. Stop introducing controversial finance schemes shrouded in secrecy and ambiguity. Stop shuffling your board every time your newsletter is due. And stop pretending you are doing a great service to the Muslim community.
Go back to the drawing board. Give the community what they want. Solid, shariah compliant home financing. Murabaha schemes for motor vehicles. Halal managed funds that are not outperformed by ANZ savings accounts. Takaful alternatives to health, vehicle, and home insurance. And microfinance for Muslim small business.
Act now, before another Islamic finance institute steals your thunder and renders your FAIL a truly epic one.