What are Sharia-compliant savings accounts

Islamic savings accounts, also known as Sharia-compliant savings rarely appear on comparison
website best buys. However, they can offer returns which compete with the top UK savings accounts.

Islamic savings accounts provide a Sharia-compliant way of saving for Muslims living in the UK. However, many people don’t realise that Islamic savings accounts are generally available to all individuals in the UK, regardless of faith.

How do they work?

Instead of offering interest on savings, Sharia-compliant savings accounts provide an anticipated or expected profit rate. Profit is generated by the bank undertaking ethical, Sharia-compliant activities and the subsequent profits are then shared with all account holders.

Investments made by the bank to generate profit must not contradict Sharia Law. For example, they cannot be associated with alcohol, tobacco or gambling. This means that Islamic savings accounts could also appeal to ethical savers.

What you need to know

• The expected profit rate is not guaranteed, and it is possible you could earn less than the expected profit rate. However, if the expected profit is below expectation, the provider will inform you and let you know your options.
• Islamic banks are subject to the same regulatory requirements as all other banks and building societies. They are regulated by the FCA and the PRA.
• Savings held in Sharia-compliant savings accounts are covered by the Financial Services Compensation Scheme (FSCS).

Sources:

https://www.moneyadviceservice.org.uk/en/articles/sharia-compliant-savings

https://moneyfacts.co.uk/guides/savings/what-are-islamic-shariaa-compliant-savings-accounts/

https://www.independent.co.uk/money/spend-save/price-comparison-websites-money-best-deals-public-readers-a8355146.html