Islamic Super  /  Investments                                                                                                                                                                                                                                                                                                                               1300 043 529

Sharia Compliance Guaranteed

At Hejaz Finance, the Sharia Compliance of our products is a non-negotiable. We have therefore collaborated with and engaged a Sharia Board of local and international Islamic Finance experts, Muftis, Imams and Scholars to guide us, build our products, and provide oversight to ensure that the highest levels of Sharia compliance at all times.

We do not consider the Australian laws to be a deterrent in the way of Sharia compliance, rather we see that they complement the Sharia system by adding a layer of transparency and consumer protection which we are proud to adhere to for the benefit of our clients.

For us, Sharia compliance is not just about a certificate or stamp of approval, rather it is a robust system which governs our products and their features, to ensure that clients are not negatively impacted by poor products in the guise of “Sharia compliance”. It is based on this ideology, that we have been instructed by our Sharia Board to prepare products that do not disadvantage clients and do not take advantage of their good intensions. Hence, our finance products are built on these fundamental pillars:

Compliant Source of Funding

One of the distinct advantages of being a subsidiary of a Wealth Management and advisory firm in Hejaz Financial Services is that we can source funds from investment pools which are available to us. This enables us to be more competitively priced and Sharia compliant. We do not source our funds from banks. Our Sharia advisers have advised against this practice as it is not Sharia compliant.

The most common way to know if your Islamic finance provider sources its money from a bank is by asking them if they receive a commission from the finance they provide. If they do, then that is a way of knowing they source their funds from a bank/lender. By law, these must be disclosed to the client.

With Hejaz, we do not source our funds from a bank, therefore we do not receive any commission. Our only source of revenue is our application fees.

Compliant transactions (contracts)

In Islam, the way in which a transaction is conducted is imperative for compliance. Hence, we use contracts that have been drafted and approved by expert Islamic Finance professionals and Sharia Advisers. These contracts are also approved by local regulatory bodies and adhere to Australian Banking and Finance codes.

Compliant and secure property ownership

With our home finance product, the title to your property is in your name from day one. That’s fair and safe. We simply hold a mortgage caveat over the title to ensure that we can recover our funds in the unlikely event of a default. You only pay stamp-duty once.

Some other providers hold the title in their own name or in trust and only transfer it to you when you make your final repayment. This approach leaves you open to risks and costs. There is a risk that the loan provider who holds the title may not be in business in 25-30 years’ time when the property is expected to be paid off, in which case you lose your home. You’ll also pay double-stamp duty.

Compliant repayment structure

Our Sharia Advisers have strictly advised us against having variable repayments as this is a unilateral change by the lender and causes uncertainty (Gharar) in repayment. We therefore only offer fixed rate repayments. Our fixed rate periods range between 1 and 3 year blocks depending on the needs of the client, with a rolling fixed rate period thereafter. We could not fix the rate for a longer block as the rates increase dramatically (7% plus).

Our Global Sharia Board

The Islamic financial services sector is the most audited and regulated Halal industry, even more so than Halal food, hence, we have taken our Sharia Compliance to new heights by teaming up with a Global Islamic Finance auditing and advisory firm, Global Islamic Financial Services Firm (GIFS).

GIFS is a South Africa based company specialised in providing Sharia Advisory services, supervision, Sharia auditing and human capital development. Their advisory board comprises of experienced scholars from Africa, the Middle-East, the Sub-continent, and Australasia; along with financial experts who bring their expertise and insight to meet the client’s needs. Their impressive portfolio includes developing Sharia compliant finance products in Canada, the UK, Russia, Dubai, and Australia.

GIFS have been involved in the establishment of the Hejaz Finance product and will continue their involvement by way of on-going Sharia oversight and annual auditing.

Our Sharia Advisers are members of:

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GIFS is chaired by Mufti Ismail Desai, an International Sharia Adviser, Islamic Finance Expert and Award Winning Author of ``Your Brief Guide to Islamic Finance``.

Our Sharia Certification

Sharia Compliance FAQ's

By following Islamic finance principles laid down in Sharia, Islamic law. To ensure the rules are followed as closely as possible, Hejaz Finance has an Internal Sharia Compliance Officer (ISCO) and a separate independent body called the Global Islamic Financial Services Council (GIFS).

The GIFS is comprised of Islamic scholars and experts in the interpretation of Islamic law and its application within modern day Islamic financial institutions. The ISCO is also trained to the highest standards, set down by The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It is recognised as the highest Sharia compliance standard in the Islamic finance industry. The combined works of the GIFS and the ISCO ensure that both the Hejaz Finance’s products and its activities comply with Islamic rules at all times.

It is important to remember that we are based on Sharia. Therefore, charge rental and not interest on their home finance products.

As an Australian provider of Credit and Financial Services, Hejaz Finance is regulated by the Australian Securities and Investments Commission (ASIC). Hejaz Finance is required to display its charges in this way so that consumers can judge the value of what it offers and charges. Customers must be able to compare Hejaz Finance’s rate and charges against what they would receive or be charged by conventional financial institutions.

By expressing the rental rate as a % the charge is not converted into interest. It simply expresses how much rental Hejaz Finance is charging the customer as a percentage of the property purchase price. It also allows the customer to compare this charge with other providers in the market, including conventional mortgage companies, and to make a decision on which product is most suitable for them. Whilst our Home Finance Product’s are Sharia compliant and the conventional mortgage is not, the % rate is a common measuring tool that makes the two products comparable.

Displaying % rates for products benefits the customer and their ability to make a choice about the products they wish to take.

 

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