Part 2 of 5: Fiqh or Fiction — What Does Standardized and Accredited Training Mean in Islamic Finance?

Click here to see Part 1 of 5: Fiqh or Fiction — The Need for Standardized Training

What Does Standardized and Accredited Training Mean in Islamic Finance?

Of the many challenges now facing the Islamic financial industry, perhaps the greatest two are:

1. Accreditation by scholars, not academic and professional bodies: The importance of an Islamic finance scholar certifying a training program is paramount, and
2. Standardization in training: The importance of this scholar-certified training conforming to a widely accepted Islamic finance standard.

There is not a single industry in the world except that it enforces standards: banking, construction, transportation, food, and drug, to name but a few. And yet Islamic finance training, the very building block of the industry, is conspicuous in its absence of standards. This is a root problem for all practitioners for which almost every other problem is but a symptom.

Lack of standardization is felt most acutely in the industry’s face-to-face training sector, where just about anyone with passable product knowledge stands before an audience of eager bankers and waxes lyrical about the virtues of Islamic finance. Of course, it would be acceptable if this trainer merely repeated the positions of those qualified to speak on the matter.

But more often than not, this unqualified trainer, professor, or writer assigns the role of scholar unto himself, guessing through an answer here, issuing a pronouncement there, with little regard for established industry standards. Seemingly innocent at first. But these same audience members then go out into the marketplace and begin putting what they learn to practice. If they remember nothing else from the trainer, they rarely forget his casual attitude towards the high standards of the Shariah, or Islamic Sacred Law, and his ready willingness to issue his own “fatwas” — a willingness they soon adopt. Non-scholar trainers may convey legal positions, but they may not create them.

Accrediting academic bodies like universities, degree programs, professional bodies, and accrediting institutes have a place, no doubt, in ensuring high pedagogical standards. Delivery standards in Islamic finance training span the spectrum from excellent to illegal. But pedagogy is not the same thing as Islamic finance.

In Islamic finance, accredited training means training approved by a scholar who confirms that the content fully adheres to a particular standard. And not just any scholar. In order to be qualified to approve something in Islamic finance, one must first be a trained and experienced Islamic scholar who possesses, foremost, deep knowledge of the Shariah with, at minimum, demonstrated, peerreviewed competence in at least one of the traditional schools of jurisprudence.

And second, he must bring practical working knowledge of banking and finance, complemented by actual practical experience in the contemporary marketplace. It is not enough for him to have read books — even AAOIFI’s Standards — and passed tests. He has to know finance at the level he is answering questions about.

The least of what can be expected of a scholar with little or no practical experience in the area of finance he is speaking about is to first ask an experienced Islamic finance scholar. Every transaction is different. And, therefore, every transaction must be understood in its context. Like a pilot who only reads a flight manual but never flies with another more experienced pilot, he is limited by what he has read. Never having executed an Islamic finance transaction under the guidance of a more experienced scholar, he is limited to the narrow confines of his inexperience.

The result? Often hasty fatwas and costly mistakes.

Click here to see Part 1 of 5: Fiqh or Fiction — The Need for Standardized Training

Part 3 of 5: Fiqh or Fiction — Standardized AAOIFI Based Training Promotes Shariah Harmonization

Part 4 of 5: Fiqh or Fiction — Addressing Common Questions

Part 5 of 5: Fiqh or Fiction — Next Steps

Approved by Ethica’s Shariah Board. For the original article with footnotes, visit www.EthicaInstitute.com.

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