The idea of an Islamic finance qualification was first discussed in 2005, when the Banque du Liban (BDL) approached both ESA and SII with the idea of developing a finance qualification underpinned by the tenets of Shariah law. As a result of these talks, the SII, with its experience in developing regulatory examinations, joined with the Beirut-based Ecole Superieure des Affaires (ESA), the leading business school in the MENA region and a leader in Islamic finance education, to develop the IFQ, the Islamic Finance Qualification.
There are several drivers behind the IFQ, but most notable are Muslims seeking to embrace their religious convictions in their financial transactions and the economic boom in the Middle East as a result of the rise in oil prices. BDL, as a banking regulator, was well aware of the growth taking place in the Islamic finance industry and wanted to ensure that there were staff trained to deal competently with that growth; otherwise, investors would suffer, as would the reputation of the industry.
A steering group chaired by Alain Balian, Vice-Governor of the BDL, was created to oversee the development of the programme, and in August 2005, the Advisory Council for Islamic Finance, the committee responsible for the IFQ's development, met for the first time. This is chaired by the First Vice-Governor of the BDL, Dr Ahmad Jachi, and draws its members from leading Shariah scholars and practitioners based around the Gulf and the UK.
With SII operating out of the UK, a supporting panel of experts based in the UK was established to ensure that the programme would be relevant to UK firms engaged in Islamic finance. And while banks and finance houses come to mind as the main users of the new qualification, the IFQ also draws interest from accountancy and law firms engaged in providing services to financial institutions.
In a Class of Its Own
In general, academic studies of Islamic finance tend to be provided through courses developed by one institution which draw on a relatively small number of experts and have a focus on theoretical debate.
In contrast, at the inception of the qualification, the decision was taken that the IFQ should provide newcomers to the industry with a broad overview of the industry. And while it was vital that the IFQ would help readers understand the role of Shariah in Islamic finance and familiarise them with the ethics underpinning the contracts, the aim was a practical qualification that would help candidates in their work - in short, the world's first ever global benchmark qualification to cover Islamic finance from both a technical product knowledge and a Shariah aspect.
The syllabus, study text and examination for the IFQ have been created using experts drawn from around the globe. Further, the IFQ is unique because it is a global benchmark examination available to candidates via Computer Based Testing (CBT), which means it can be studied and the examination taken in almost 100 centres around the world. Currently, candidates in some 29 countries - as far apart as Australia and Denmark - are preparing for the examination.
In summary, the IFQ is unique because:
There is no other qualification or unified standard practice which covers Islamic finance from both a technical and Shariah aspect which offers the degree of international portability and professional competence comparable to that offered by the IFQ.
The IFQ provides the first international benchmark in the area of Islamic finance and it is aimed at existing employees and new employees as well as individuals seeking a career in Islamic finance.
The IFQ is jobs-focused and requires candidates to demonstrate a practical understanding of Islamic finance as opposed to discussing academic and theoretical issues.
The IFQ has drawn on many experts from a number of countries in its creation.
Launching the IFQ
The SII's role in the introduction of the IFQ is best summarised by SII Managing Director Ruth Martin: "Setting standards for practitioners is a vital part of any professional body's remit. SII has been delighted to combine its expertise in both examinations development and professional standards to partner with ESA in the Middle East in this innovative new qualification aimed at helping practitioners grasp the fundamentals of Islamic finance and banking."
The IFQ was launched in October 2006 by the then Lord Mayor of the City of London, Alderman Sir David Brewer, and the Governor of Lebanon's Central Bank, Mr Riad Salamé, at an event attended by the then UK Economic Secretary to the Treasury, Mr Ed Balls, and Vice Governors of Lebanon's Central Bank, Mr Alain Balian and Dr Ahmad Jachi.
The launch generated considerable interest in the media, as it was noted that the workbook underpinning the examination was the world's first ever handbook on practical Islamic finance and banking, and so would be of interest to organisations already engaged in this area, or those thinking of moving into Islamic finance and banking, as a practical guide for their staffs.
Test Time
As a wholly new qualification, it was vital that the examination was pitched at the correct standard. Two pilot examinations were held in Beirut and London in November 2006 and January 2007. Candidates' experience at these sessions provided feedback on the workbook and the examinations with the result that an amended workbook was published in January 2007 and the first global public sittings of the IFQ took place in March 2007. For candidates, a further benefit of a CBT examination is that they receive their results instantly and can rebook quickly if they have failed.
The examination is a two-hour, 100 multiple-choice question paper covering the basis of Islamic banking and finance; the Islamic law of contracts; the major contracts of Mudaraba, Murabaha, Musharaka, Ijara, Salam and Istisn'a; financial statements for Islamic banks; Islamic corporate governance; Islamic asset and fund management; Sukuk and Takaful.
Candidates are advised to spend around 100 hours studying for the examination and if candidates are non-Muslim and have no experience of Islamic finance, they are strongly recommended to attend a face-to-face training session.
With this in mind, a growing network of Accredited Training Providers has been put in place, based globally in the following regions:
7 City Training - UK
Guernsey Training Agency - Guernsey, UK
Gulf University of Science and Technology (GUST) - Kuwait
Ecole Superieure des Affaires (ESA) - Lebanon
BPP - UK
The pass mark for the examination is 70 percent and the pass rate is currently around 70 percent. The examination fee is £150 and the workbook costs £75. Candidates seeking a training course are advised to contact an Accredited Training Provider for details of fees and dates.
Margaret Spong is SII's Head of Qualifications Development and is responsible for developing new qualifications such as the Islamic Finance Qualification. Current projects include the revision of the SII's senior practitioner qualification the new SII Masters (Wealth Management programme) and introduction of examinations as part of the Egyptian Capital Market Authority's new Licensed Individual Regime.
By Margaret Spong
© Business Islamica 2007
