Building a Fairer Financial Future: The Push for Inclusive and Ethical Islamic Finance
The UK is undergoing a financial transformation and Islamic finance is firmly on the invitation list.
With the Mansion House 2025 speech and the unveiling of the Leeds Reforms, the UK government has launched a bold new strategy to rewire its financial system, boost investment, and position the country as the global destination for innovative and inclusive finance. Combined with the ongoing Consumer Credit Act (CCA) reform, this creates a fertile environment for Sharia-compliant financial services to thrive.
Delivered by Chancellor Rachel Reeves in July 2025, the Mansion House speech introduced the Leeds Reforms, a sweeping package of regulatory and structural changes aimed at unlocking capital, modernising regulation, and creating skilled jobs across the UK.
This strategic reset is not just about traditional finance it’s about broadening the tent to include ethical and sustainable financial models. Islamic finance, with its emphasis on risk-sharing, asset-backing, and social responsibility, aligns naturally with this vision.
Consumer Credit Reform: Removing Barriers for Sharia-Compliant Products
Running in parallel is the reform of the Consumer Credit Act 1974, which has long been seen as a barrier to Islamic finance due to its rigid, interest-based terminology and outdated disclosure requirements.
The government’s Phase 1 consultation, launched in May 2025, proposes to:
replace prescriptive rules with principles-based regulation under the FCA.
allow greater flexibility in product design and disclosure, enabling Green and Islamic finance providers to offer Sharia-compliant credit without conflicting with regulatory language.
Support financial innovation while maintaining strong consumer protections which is strongly aligned with the core principles of Islamic Finance.
This reform is a game-changer for Islamic finance institutions looking to enter or expand in the UK market.
Ethical and Sustainable Finance: A Shared Agenda
Islamic finance principles, mirror many of the goals of the Environmental, Social, and Governance (ESG) movement. As the UK accelerates its green finance agenda and promotes long-term, inclusive growth, sharia compliant products offer a ready-made framework for delivering values-driven financial solutions.
With more consumers, regardless of background, religiosity, faith (or lack of faith even), actively seeking ethical and sustainable alternatives to conventional banking, the UK is primed for a new wave of alternative finance providers. Over the past decade, we’ve seen encouraging growth in halal purchase plans, savings accounts, and other Sharia-compliant products. Yet, many in the UK Muslim community still feel that access to faith-aligned financial services remains limited and out of reach for the average consumer.
This isn’t just a gap. It’s an opportunity.
To move Islamic finance from the margins to the mainstream, the industry must step up, innovate, expand, and make these products more visible and accessible. As the UK embarks on ambitious financial sector reforms aimed at revitalising its global standing, Islamic finance providers have a rare chance to help shape the future of finance in one of the world’s most influential markets.
Now is the time to engage, invest, lead and be visible. If you are looking to enter the UK market or are looking to get authorised, there is no better time. The government is inviting firms to invest in the UK, and to this end applications are likely to be viewed with a pro-innovation lens which supports the UK government’s growth ambitions.
How can Avyse Partners help?
We are experts in the field of regulatory compliance, ESG and financial crime. Having worked in and with Sharia compliant institutions in the past, we understand the nuances and complexities faced by Sharia compliant providers and can help you navigate these. We have the practical skills to weave in the reformed Consumer Credit Act, Consumer Duty and any other relevant regulations that allow you to go to market confident that your products and services align with regulatory expectations.
We are one of the largest providers of skilled person reviews by volume and are proud of our status on four of the FCAs s166 panels: governance, conduct, risk and financial crime.
If you want to know more about the services we offer, reach out to us via LinkedIn or email us at contact@avyse.co.uk for a friendly informal chat - we’d love to hear from you!
