MSE News: New sharia account offers 1.6% easy-access savings - but should you get it?

Biggus_Dickus

18cc wrote: »

How is the interest paid compared with a normal instant access account?

eg is the 'expected profit' added daily?

if you withdrew money after say 2 days would you get your money back.plus 2 days of 'expected profit'?

Yes!
Spoke to Al Rayan help-desk this morning.:)

I had to endure another 25mins of Arabic crooning,... but it didn’t seem too bad this time;

...I think it could be a hit.

adindas

Is it possible to open multiple accounts ?

d63

adindas wrote: »

Is it possible to open multiple accounts ?

well i have two accounts open despite only requesting one. but this may just have been because something went wrong with the initial application which hung 4/5 of the way thru and had to be repeated.

d63

i received a paying-in book for my al rayan easy access account today, (well 2 paying-in books actually -- see my previous post #64) but instead of the sort code being al rayans 30-00-83 which i use for sending the faster payment transfers, the code is 30-00-00 for a lloyds bank collection account.
any idea what's going on here?

bail-in

Link to Al Rayan bank offers: savings-account-comparison-table.pdf

https://www.islamic-banking.com/explore/islamic-finance/shariah-rulings/question-answers-shariah-rulings/mudarabah

The above link defines the mudarabah Shariah ruling which applies to the Al Rayan instant access savings account 1.6% EPR. Note in the mudarabah account types 100% of capital invested by the bank is at risk and all losses are passed on to the lenders customers, the depositors. That is a legal relationship, contract. However, depositors are protected by the promise of the FSCS up to £85,000 covered in case of receivership of the bank. Yep, just a promise. No enforceable legal relationship there between the depositor and the FSCS, the PRA and the BofE. It is doubtful our nationally indebted government banking protection scheme, the FSCS, could bail-out systemically important UK bank failures. Hence the 2016 bail-in toolkit rule. I like the Islamic Shariah morally linked banking rules re investment and risk, somewhat similar to the earlier Christian Church law. Shariah banks as a result weathered the 2008 crisis very well compared to other banks. Unlike many other countries, not from want of trying, including the USA, the UK have BofE ring fencing since 1st January 2019 to protect our deposits in the retail arm from losses in the investment arm of the bank. However, it only applies to a few of the retail banks determined by capital holdings, including: HSBC, Santander, Nat West, Barclays, Lloyds, RBS.

stevec59

I'm considering a fixed term account with theses guys, as they don't pay interest, they share profit, does that affect you Personal Savings Allowance from the Tax office?
I'm close to the £1,000 Personal Allowance on interest and this would put me over, so I'd need to pay 20% on the amount over £1,000?

Thanks

Steve

BigBlueSky

stevec59 wrote: »

I'm considering a fixed term account with theses guys, as they don't pay interest, they share profit, does that affect you Personal Savings Allowance from the Tax office?
I'm close to the £1,000 Personal Allowance on interest and this would put me over, so I'd need to pay 20% on the amount over £1,000?

Thanks

Steve

It works the same, just a different name for interest - It gets treated as interest by HMRC

Sea_Shell

stevec59 wrote: »

I'm considering a fixed term account with theses guys, as they don't pay interest, they share profit, does that affect you Personal Savings Allowance from the Tax office?
I'm close to the £1,000 Personal Allowance on interest and this would put me over, so I'd need to pay 20% on the amount over £1,000?

Thanks

Steve

HMRC still treat it as interest... despite them calling it profit!!

eskbanker

The question's already been answered but I've always liked the neat and stylish response given on a similar thread before:

poppy10 wrote: »

Allah won't class it as interest but HMRC will

stevec59

Thanks everyone, I thought that might be the case. Annoying though :mad:

:mad:
Steve