28/8/2013: Islamic Finance in Ireland? Few questions...

Anyone residing in Ireland needs no introduction to the nearly boundless supply of stories from the Irish financial services sector that are just begging to be converted into a menacing thriller replete with villains and victims and clueless asleep-on-the-job 'enforcement' authorities.

Well, here's another one of such stories: http://www.insurancejournal.com/news/international/2013/08/23/302671.htm citing Ireland's example of allegedly Sharia-compliant financial fund that .

Lest we forget, Islamic finance is one of the cornerstones of Irish Government strategy for stimulating inward FDI and growing the IFSC. Back in 2012, the Journal.ie asked a handful of simple questions about this new 'knight in the shining armour' riding into town to save us. You can see more up-to-date stats on this here: http://www.pwc.ie/asset-management/islamic-finance.jhtml.

I am more than open to comments on this topic, as I am not an expert on Islamic finance. I am also absolutely neutral to the Islamic finance just as I am neutral toward a bunch of other services I neither research nor consume... but... have we bothered to ask some core questions about all this Sharia-compliant financial engineering in Ireland before jumping into the waters we know little about?

1. Ireland has no practical or cultural experience in any of the basic tents of Islamic finance.
2. Ireland has a society rooted in ownership of assets and profit-extracting considerations of ownership - a notion that is directly contradictory to the principles of the Islamic finance.
3. Where are the skills sets required for conducting Islamic finance transactions coming from in Ireland? There are some training facilities now available, including those provided by law firms and financial advisories. But the programmes are nascent and hardly present a critical mass (or capability to deliver such in foreseeable future) of skills.
4. Where is the certification infrastructure on the ground (as opposed to offshore) to certify the Islamic finance products? Who are the Islamic scholars approving the products domiciled into Ireland? Who monitors them? Who are the requisite Sharia-compliant directors? How many of them reside in Ireland? Notice that per article in the Insurance Journal - there is a shortage of Islamic scholars necessary to provide cover for Islamic finance in one of the largest Muslim countries: Malaysia. But, obviously, not in Ireland.
5. Irish regulatory environment relies on low-burden of regulation (and in the past also relied on low-burden supervision, which is changing, but the process of change is not yet completed) applied across standardised sets of products (services). This conceptual framework is potentially not aligned with the highly regulated and regimented, Sharia-compliant structures of the Islamic finance, reliant often on specific judgements and decisions, rather than explicit processes.

There is even a curious case of something called the Islamic Financial Regulator in Ireland (http://islamic-chamber.org/divisions-2/islamic-finance-ireland-2), despite the fact that it appears it is the Central Bank of Ireland that carries out the regulatory functions in relation to the Islamic finance. At least the Revenue Commissioners seem to be sure of that: http://www.revenue.ie/en/practitioner/tech-guide/guidance-notes-islamic-finance.pdf.

Having contacted the Central Bank, I received a confirmation that

1. The Central Bank acts as a regulatory body overseeing all financial products domiciled into Ireland and in this capacity it also oversees Islamic finance products; 
2. Islamic finance products are not treated differently from other products by the Irish regulatory frameworks; and 
3. The Central Bank of Ireland has no relationship with IFR or the Islamic Financial Regulator (Ireland). 

So here's a follow up question: Do you think it would be ok for, say, an average Joe to call himself a 'XYZ' Financial Regulator (Ireland) and then publicly market himself as such?

And now a follow up question: Should we be concerned with what is going on in the Islamic finance sub-sector in Ireland?