Islamic Banking Developments

4 April 2003

Warren Edwardes interviewed by John Murray, Editor, Mortgage Finance Gazette on Islamic finance in the UK.

"Amongst the many problems for developers of Islamic mortgages in the UK are two issues - the issue of APRs and early and late repayment penalties." says Warren Edwardes, ceo of Delphi Risk Management and a Fellow of the Institute of Islamic Banking & Insurance. Edwardes recommends the use of a Shari'ah board but even then strongly advises against the explicit use of the term "Islamic" in case unwritten terms are implied by the customer. "There is a view that the much and unfairly maligned APR can solely be applied to the rate of interest on a loan. I would suggest that the APR could equally be used to yardstick the <Annual Percentage Rate of Financing> of a mortgage", says Edwardes. "As Natwest found to its costs, the issue of repayment penalties in fixed rate mortgages is a problem not just for Islamic mortgages. But there are techniques that can be used to protect lenders at fixed rates for both Islamic and non-Islamic loans."

Warren Edwardes is CEO of Delphi Risk Management, the London-based financial product creativity, communication and control consultancy.

Warren was previously on the board of Charterhouse Bank and has worked in the treasury divisions of Barclays Bank, British Gas and Midland Bank. He first researched into what were later to be called "derivatives" in 1975 and was part of the team that executed one of the world's first currency swaps in 1981. Since then he has devised and transacted numerous structures that form part of the history of derivatives. Warren can be contacted via we@dc3.co.uk

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