My Lords, I think that we all recognise that Islamic finance—the sukuk market—is the fastest growing global financial sector, with growth of 10% to 12% a year. The current stock is some $3.5 trillion, with $100 billion of new issuance a year. The UK plays a very important role, as the most significant western market. As the Minister said, in June 2014 we became the first non-Muslim country to issue a sukuk.
I have no problems with the content of this statutory instrument. It is an “oh, oops!” and should have been included in the April order. This underscores the
complexity we now have in dealing with FSMA 2000. It is now so complex that it is not at all unusual for real issues to fall through the cracks. If ever there was a candidate for a piece of consolidated legislation, it is this whole financial area. In 2012, we found ourselves with a Bill that, when tracked through the legislative trail, required the Governor of the Bank of England to appoint himself. Another issue, which we could not find a way to get rid of, was the Governor of the Bank of England being required to write himself a letter to update himself on what he was doing. Those are slightly humorous examples, but this one is a real “oh, oops!” and I hope that the Government will take that on board.
Picking up the point made by the noble Lord, Lord Lexden, there is a growing sense that the Government do not quite respect the procedures of this House and this Parliament. There is a rationale for saying that there should be a period between an order being approved and it being implemented. In this case, it seems that only one company may be involved, but for that company it makes no difference whether there was one day’s notice or 21. It would have been an opportunity to show that the general procedures of this House are treated with that kind of respect and are followed, unless there is a genuinely exceptional circumstance; I do not think it can be argued that there is in this case. The concerns of the London Stock Exchange would have been met by the approval. It did not require that the order should become effective instantly.
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I wanted to raise a couple of other issues. A sukuk is equated here to a government bond but it is much closer in character to an asset securitisation. Can the Minister give an assurance that that is recognised, as the various regulatory phases are put in place for this to become a much more widely and generally used instrument? The reason why that matters is that it basically shifts where the risk lies. In a sukuk structure there is much more risk to the investor than there would be in a traditional government bond structure. It is important that the Government have that in mind rather than thinking of these as essentially instantly equated. There are also issues because, obviously, those who determine what an appropriate sukuk is are religious leaders because this is a sharia instrument, and in many different places there are different views on what qualifies. We probably need a clarifying framework as this becomes a much more significant instrument to use. I hope the Government can give us some reassurance that they are taking that on board.
Finally, as we look at this crucial sector, the whole issue that is not being tackled is Islamic student finance. The Government did their consultation back in 2012, knew exactly what they had to do and now intend to rectify the problem—but not until 2020, leaving year after year of students who feel that they cannot take out a student loan on conventional terms but are unable to access that kind of financial support to go to university and to follow the studies that we all want them to be able to follow. Surely, as the Government recognise the urgency of making sure that the sukuk market is liquid, viable and growing in the UK, they
could put their skates on to deliver something for our students, who need an equivalent instrument to deal with student finance.