We are regularly asked questions about the Bank, our products & services and Islamic finance in general. In these pages we have tried to answer as many of these questions as possible, in a variety of formats.

Current & savings accounts

Home / property finance

Online banking

Payments

About us

Islamic finance

Our products & services

Tax self-certification

Current & savings accounts

Home / property finance

Online banking

Payments

About us

Islamic finance

Our products & services

Tax self-certification

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How do I change my address, phone number and email address?

You can change any of the details we hold for you by writing to us or by visiting a branch. If you have a joint account, you can update the joint account address and your customer address. The other account holders will need to contact us separately to update their customer addresses. Please don't email us any requests to change your contact details – they're not secure so we can't act on them.

If you are writing to us please include your name, address, account number and a wet signature. If you are changing your address and your account has been opened for less than a month, we'll need to see a proof of address as well.

Please visit our contact us page for our up to date contact details.

What is the minimum / initial deposit on current / savings accounts?

Minimum deposit amounts vary depending upon the account. Please visit our accounts comparison page to find out more.

What is the expected profit rate on my account?

You can view your savings account(s) expected profit rate(s) online if you have online banking, by phone or by visiting a branch. If you are checking it online, please click on the 'View your expected profit rates' link on your main screen after logging in. Current Accounts don't pay any profit.

How do I order a new cheque or paying in book?

You can give us a call, visit a branch or write to us. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details.

What should I do if my card, cheque book or paying-in book has been lost or stolen?

You should let us know immediately if your card, cheque book or paying-in book has been lost or stolen. You can give us a call, visit a branch or write to us. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details. Please see our tariff list for details of our charges. 

My card has been damaged, how do I order a new card?

You can give us a call, visit a branch or write to us. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details. There are no charges for ordering a replacement card if your card gets damaged. You can continue using the same PIN when you receive your replacement card.

How much notice do I need to give for my notice savings account?

You will have to give a notice depending upon the length of your account. For example, for 90 Day Notice Savings Account you'll have to give us 90 days' notice to make a withdrawal.

How do I give a withdrawal notice on my notice savings account?

You can apply a notice online if you have online banking, by phone, in a branch or by writing to us. To apply the notice online, please select the 'Notice Withdrawals' section from the 'Personal Banking' menu. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details.

You will not be able to make any partial or full withdrawal or close your account before you give us the relevant notice, as applicable to your account and in line with our terms and conditions.

What do I do if I change my name?

You'll need to inform us if you've changed your name by writing to us or by visiting a branch. Please visit our contact us page to find out our up to date contact details. We'll need to see a proof, for example, deed poll, passport, marriage or divorce certificate.

How do I transfer my money between by my Al Rayan Bank accounts?

You can do this through your online banking if you've online banking, over the phone or in a branch. Please visit our contact us page to find out our up to date contact details. If you're using online banking, please click on the 'Move my money' link within the 'One off payments' section.

Where can I use my debit card? I tried using my card at a pump, it didn't work?

Al Rayan Bank debit cards can be used at all outlets that accept Mastercard® Debitcard. However it cannot be used at casinos, automatic fuel dispensers and money remittance retailers such as Western Union.

Al Rayan Bank debit cards cannot be used at casinos, automatic fuel dispensers and money remittance retailers.

How much tax do I pay on my savings?

From 6 April 2016 all banks and building societies are no longer required to deduct tax from the savings returns you earn. You have a Personal Savings Allowance and once you reach that, you will need to pay any tax that’s due. ISA savings do not form part of your Personal Savings Allowance and remain tax-free. For more information, please click here.

How do I stop a cheque and is there a charge?

No, from 13 January 2018 there is no charge for stopping a cheque.

To stop a cheque, you can give us a call, visit a branch or write to us. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details.

How do I set up a standing order?

You can do this online if you have online banking, over the phone, in a branch or by writing to us. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details.

Is there a maximum number of Direct Debits I can hold on my account?

No. there is no restriction as to the number of Direct Debits you can hold.

I have received a dormancy letter, what do I do?

We'll need to see your proof of identity and proof of address to reactivate your account. You can do this in a branch or by writing to us. If you are writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details.

Is there a maximum number of standing orders I can hold with you?

No. There is no restriction as to the number of standing orders you can hold.

Can I amend or cancel a standing order online?

You cannot amend your standing orders. However, you can cancel your standing orders online and set it up again if you like.

Can I use my card when travelling abroad?

If you are travelling outside the UK, you'll need to let us know. We'll need your details around when and where you're travelling, duration of your stay and your emergency contact details.

Due to international rules and restrictions, your debit card may be restricted in certain countries, so please have an alternative method of payment available where possible. To see the full list of countries please click here.

Please visit our contact us page for our up to date contact details.

I cannot use my card for online purchases?

You'll need to register your card with Mastercard® Securecode to make purchases online. You'll need your password on the account to continue. If you still cannot make purchases online, please contact us and we'll look into it for you.

Please visit our contact us page for our up to date contact details.

What is the difference between available balance and account balance?

Account balance includes items that are on hold or that haven't been fully processed, for example a cheque deposit. Available balance is the amount you can use.

I have received my debit card and not the PIN, can I still use contactless?

Whether you've received your debit card for the first time or it's a replacement for your old card, you'll need to complete a chip and PIN transaction to enable the contactless feature.

What is the daily spend limit for my debit card?

£10,000

What is the maximum amount I can withdraw on a single day?

At an ATM - £250 for personal, £500 for business and £750 for premier

At a branch - £5,000 per customer per day without notice; for anything more than £5,000 we'll need 48-hour notice

How can I order a banker's draft and what are the charges?

If you need a banker's draft for up to £5,000, you can visit a branch without notice. For anything more than £5,000 you'll need to give us 48-hour notice. Please visit our contact us page for our up to date contact details.

What are IBAN and BIC?

IBAN stands for ‘International Bank Account Number’ and BIC stands for ’Business Identifier Code’. BIC is also sometimes referred to as a SWIFT Code or Bank Identifier Code. You use these when making or receiving international payments.

IBAN and BIC allow overseas banks to easily identify your Bank and account number, and are normally used in conjunction with each other.

What is my IBAN and BIC / SWIFT Code?

From August 2017, all Al Rayan Bank accounts have an individual IBAN, and the Bank has its own BIC. You can find your IBAN on your bank statements, and Al Rayan Bank BIC / SWIFT Code is ARAYGB22.

I tried using my card at a pump, it didn't work?

Al Rayan Bank debit cards cannot be used at casinos, automatic fuel dispensers and money remittance retailers.

How do I order a duplicate statement and is there a charge?

To order a duplicate statement you can give us a call, visit a branch or write to us. If you're writing to us, please include your name, address account number and a wet signature. Please visit our contact us page for our up to date contact details.

Please see our tariff list for details on our charges.

How do I change my statements frequency?

To change your statement frequency, you can write to us, give us a call or vist a branch. If you're writing to us, please include your name, address, account number and a wet signature. Please visit our contact us page for our up to date contact details.

Can I make additional / lump sum payments on my home finance (HPP) or Buy To Let finance (BTL)?

Yes, additional acquisition payments can be made in the month of each rent review; minimum £4,000 with a £25 administration fee. No additional acquisition payments are permitted during the fixed rental rate period. There will be four rent reviews a year in March, June, September and December.

How do I make an additional / lump sum payment and what are the charges?

You can do this over the phone or by visiting a branch. Please visit our contact us page for our up to date contact details. You cannot make additional acquisition payments whilst on a fixed rental rate.

The minimum payment allowed is £4,000 with a £25 administration fee. The payment needs to be made no later than the 20th day of the month of a rent review, and the payment will be applied to your account on the date of the following months' payment. Rent reviews are carried out in March, June, September and December.

What is the process of redeeming my home / property finance?

You'll need to give us a call to request a redemption statement. You'll need to provide the date of redemption; the details of your solicitor and we may need to see the source of funds. Please visit our contact us page for our up to date contact details.

Can I apply for more than 1 (one) home finance products?

Yes, in specific instances you can apply for more than one Home Purchase Plan. For example, if you work away from home and you want to buy a second residential property to live in throughout the week.

Can I switch my home finance (HPP) or Buy To Let product?

You cannot switch your product whilst a fixed or discounted rental rate applies. Prior to the expiry of your existing fixed or discounted rental rate, we'll write to you advising you of the options available to you. Once your existing product expires, we'll switch your product for you as per your selected option. There is a £199 administration fee for switching.

If you are already on a life tracker product such as the Al Rayan Bank Variable Rental Rate, you can switch at any time subject to the payment of the administration fee. For any other type of product switch, please contact us. Visit our contact us page for our up to date contact details.

How can I check the breakdown of my monthly payments?

Unless you are on a fixed rental rate, we'll write to you each quarter as part of the quarterly rent review stating your payments over the next 3 months. If you are on a 6-monthly review, we'll write to you every 6 months. Customers on fixed rental rates are not subject to a rent review until the fixed rental rate expires.

In all cases, we will provide you with an annual statement detailing the payments you have made over the last 12 months, these statements are usually issued throughout October and November.

You can also ask us for a breakdown of payments made to date, or your forthcoming payments, there will be an administration fee for providing this information and you should refer to our Tariff List for the charges that apply.

How can I change my home finance / Buy To Let Direct Debit details?

You can change your Direct Debit details over the phone, by writing to us or by visiting a branch. If you've a joint account, either of the signatories can submit the request. If you want your details amended before your next payment is due, we'll need 10 working days to process. Please visit our contact us page for our up to date contact details.

What is the maximum amount I can transfer online?

If you are transferring externally, daily limit for personal customers is £20,000 and £250,000 for business customers. Transactions during the weekend will be subject to an overall limit of your respective daily limit. There is no limit for internal transfers.

How do I register for online banking?

If you're an existing customer and wish to apply for online banking, please download and complete the form from our website and send it to us or visit a branch.

Please visit our contact us page for our up to date contact details.

I cannot see all of my accounts in my online banking?

You should be able to view all of your internet enabled current and savings accounts online. If you cannot, please contact us. Visit our contact us page for our up to date contact details.

If we have a joint account can we both use the online banking service?

Yes, both account holders can use the online banking service provided you both have your own User ID and Password. The only exception is where joint signatories have been requested.

Will viewing my transactions online affect my next paper statement?

No. Your statement will be sent out as usual.

What are Third Party Providers (TTPs)?

A TPP is a third-party service provider that can access information on your accounts and make payments on your behalf from your accounts. To do this, you’ll have to provide the TPP with your explicit consent, and the TPP must be authorised by the Financial Conduct Authority or another European regulator. If they are not an authorised TPP or we believe the request is fraudulent, we’ll have the right to refuse access.

Is there a charge for transferring funds to another organisation or person using online banking?

No, there is no charge.

What is a verification code and where is it used?

A verification code is a secure number sent to you through a variety of methods (email, text message or phone call) to verify a new or amended payee. You will need to enter the code to confirm the addition/amendment to your payee.

How can I update my verification code contact details?

To update your verification code contact details, please contact us. For security reasons, you are not able to update your verification code contact details online.

Please visit our contact us page for our up to date contact details.

Can I transfer funds to my accounts held at other banks?

Yes, you can either set up a one-off payment or a regular standing order.

Can I order a transaction history online and what are the charges?

You can view up to six months of transactions online. To order a transaction history, please contact us. Please see our tariff list for details on our charges. 

What is the cut off time for payments?

•UK CHAPS and Faster Payments: 5:00pm on a working day
•International payments: 3:30pm on a working day

If we receive your instruction after the payment cut off time, we will normally process it the next working day.

What is CHAPS?

These are Sterling payments to UK accounts that are guaranteed to reach the recipient on the same day, provided you meet the payment cut-off time. There is a charge for using this service, and there may be delays if we need to speak to you about your payment.

What is Faster Payment Service?

The Faster Payments Service (FPS) is a payments-clearing scheme for electronic sterling payments in the UK. Most electronic payments sent through FPS will arrive at the recipient bank on the same day – as long as both the sending and the recipient banks are participating in the scheme and the payment amount falls within the scheme limit.

What’s the difference between BACS, CHAPS (same-day UK payments) and Faster Payments?

Faster Payments - These are electronic payments that can be made online, over the phone, or in a branch, and can be made same day subject to payments cut-off time – so long as both banks are part of the Faster Payments Service. We automatically send payments through Faster Payments where possible.

CHAPS - This guarantees same-day payment – so long as the instructions are received before the payments cut-off time. There’s no limit to the amount of money you can send, although there is charge for using this service. Please see our tariff list for details on our charges. 

BACS - This is an electronic system to make payments directly from one bank account to another. They’re mainly used for transactions like Direct Debits. The payments take 3 working days to clear, for example, money paid into your account on Monday will clear on Wednesday.

Although most electronic payments will arrive at the recipient bank on the same day, however this isn’t guaranteed as there may be delays if we need to speak to you about your payment.

How long will it take for a credit card / utility bill payment to be made?

If you are paying a credit card or a utility bill, you should double check the back of your bill/statement to find out how their payment system works. Some organisations may require additional time to process payments.

I don’t recognise a transaction, what do I do?

You'll need to inform us as soon as possible. You can give us a call, write to us or visit a branch. Please visit our contact us page for our up to date contact details.

I have had a Direct Debit taken out of my account when it shouldn't have?

You'll need to get in touch with us to look into it for you. Please visit our contact us page for our up to date contact details.

I made a payment to the third party which wasn't received?

We endeavour to process all payments for same day provided we receive the instruction before 5:00pm cut off time. If the instruction is received after the cut off time, the payment will be made with the following working day. If it's been longer than this and the third party hasn't received the payment, you can get in touch with us and we'll trace your funds.

Please visit our contact us page for our up to date contact details.

I made the payment to a wrong account, what can I do?

You'll normally receive the payment back if you've used wrong account details. If you haven't received it back by the end of the day, please get in touch with us. Visit our contact us page for our up to date contact details.

How do I make a payment through my online banking?

To make payments through your online banking, you'll first need to add the payee to your account. Once your payee is set up, please visit the 'One off payments' section from the online banking menu, select the payee, confirm the date, enter the amount and select the account you want to make the payment from.

How do I add a payee to my online banking?

To add a payee, you'll need the account name, sort code and account number of the recipient, and be able to verify the request. You'll receive the verification request via a text message, phone call or an email depending upon the option you've selected. Once the verification is complete, the payee will appear in your list of payees.

If you've trouble adding a new payee, please contact us. Visit our contact us page for our up to date contact details.

Can I get a refund for an unauthorised payment?

Unless you’ve been fraudulent or grossly negligent (acted with a very significant degree of carelessness), we won’t make you liable for any unauthorised transactions on your account including transactions from Third Party Providers (TPPs).

Where you are entitled to a refund for an unauthorised payment, we’ll make the payment to you as soon as practicable, and no later than the end of the next working day.

What happens if a payment is made into my account by mistake?

If a payer makes a payment into your account by mistake, we don't need to contact you to reverse the payment. If you've used the amount and you refuse to refund the payment, we’re legally required to share all the relevant information including your name, address and transaction information with the bank that the original payment came from, if they request this information. This will enable the original payer to contact you directly.

What is AIS and PIS?

Account Information Service (AIS): An online service to provide consolidated information on one or more payment accounts held by you with one or more payment service providers.

Payment Initiation Service (PIS): A service to initiate a payment order at your request with respect to a payment account held at another payment service provider.

Can I pay the recipient bank charges for international payments?

For payments within the EEA, you cannot pay the charges for the recipient irrespective of the currency transferred. For payments outside of EEA you can pay the charges for the recipient. Please see our tariff list for up to date details on our charges.

I am expecting a payment from overseas, can I trace the payment?

We cannot trace the funds that we are expecting to receive. You (or the sender) will need to contact the overseas bank to trace the funds.

I made a payment and it got declined but the funds have come out of my available balance?

Your funds may have been put on hold. You'll have to wait for the hold to come off which may take up to 2 weeks. If it's been more than 2 weeks, please contact us and we'll look into it for you. Please visit our contact us page for our up to date contact details.

I want to use Lloyds Bank branch counters, what are the charges?

You can deposit cash and cheques at Lloyds Bank branch counters. There is no limit on the number of transactions you can make at the branch counter, however there is a charge of £3 per visit if you are depositing funds into your current account. There is no charge for savings accounts. 

I have been charged the wrong amount for a transaction?

If you think you have been charged incorrectly, the quickest and easiest way is to contact the merchant as soon as possible. If you've spoken to the merchant and you've been unsuccessful, you can get in touch with us. We'll send you a form to complete and once we've received the form back from you, it may take up to 28 working days.

How is Al Rayan Bank different to conventional banks?

Al Rayan Bank offers to customers the same banking services as conventional banks except that it operates in accordance with the rules of Sharia (Islamic law). The absence of interest is one of the key factors that differentiates Al Rayan Bank from conventional banks.

Since 2004, Al Rayan Bank has helped thousands of UK customers undertake their day-to-day banking requirements without compromising their values.

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How are Al Rayan Bank’s products different?

Each product offered by the Bank uses specific Islamic finance principles that are derived from trade, entrepreneurship and risk-sharing. Each product is individually approved by a fully independent Sharia Supervisory Committee.

Is Al Rayan Bank an ethical bank?

Al Rayan Bank’s approach has been recognised as an ethical alternative to conventional banking by Ethical Consumer magazine and the Move Your Money campaign, a comparison of just over 70 UK and global banking providers on five key categories – honesty, customer service, culture, supporting the economy and ethics.

How does Al Rayan Bank ensure it is Sharia compliant?

By following Islamic finance principles laid down in Sharia, Islamic law. To ensure the rules are followed as closely as possible, Al Rayan Bank has a Sharia Compliance Department (SCD) and a separate independent body called the Sharia Supervisory Committee (SSC). The SSC is comprised of Islamic scholars and experts in the interpretation of Islamic law and its application within modern day Islamic financial institutions.

The staff in the SCD are 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 SCD and the SSC ensure that both the Al Rayan Bank’s products and its activities comply with Islamic rules at all times.

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What does Al Rayan Bank offer?

Al Rayan Bank provides the largest range of Sharia compliant retail financial products in the UK. Since 2004, Al Rayan Bank has helped tens of thousands of customers, Muslim and non-Muslim, buy their own homes, save for their children’s future and expand their businesses without compromising their values.

As an ethical bank does Al Rayan Bank have a sustainability policy?

Al Rayan Bank does not currently have an official sustainability policy.

What socially responsible activities does Al Rayan Bank participate in?

As well as supporting national and international charities, Al Rayan Bank is active in the community - supporting local charities and sponsoring numerous community events. Additionally, we regularly undertake community-based work, such as providing mentoring to school children through the Mosaic Network and Schools Enterprise Challenge.

Aren’t the ‘profits’ Al Rayan Bank offers simply interest dressed up in a Sharia compliant way?

No, absolutely not. This is something which is sometimes asserted, but it is wholly inaccurate. Al Rayan Bank shares profits with savings customers as a result of trading activities and charges rent to home finance customers. All products are fully endorsed by the Sharia Supervisory Committee and are 100% in accordance with the principles of Sharia (Islamic law).

How does Al Rayan Bank work in a socially responsible way?

As well as being guaranteed that their money will never be invested in any activity not permitted under Sharia, Al Rayan Bank is committed to transparency and fairness, integrity and respect, putting the customer at the heart of its business.

How does Al Rayan Bank work in a transparent way?

Al Rayan Bank customers are made aware that savings accounts offer ‘expected profits’ and that the Bank uses their money in trades of low risk commodities (non-precious metals), Sukuk (Islamic bonds) and in the Bank’s property finance products.

The whole premise of Islamic banking is that the customer and bank work together as trading partners towards a mutually profitable end. This is monitored by an expert independent body, the Sharia Supervisory Committee (SSC), to ensure that the Bank’s activities do not only serve its own purposes but benefit the customer as well.

Al Rayan Bank also advertises all the expected and achieved profit rates on it’s website.

Where can I go if I want to start using Islamic finance for my mortgage and savings instead of banks and building societies that are based on interest?

The UK has quite a well-developed Islamic finance system, especially when compared to other Western countries. According to research from the CityUK Islamic Finance 2011 report there are 22 financial institutions offering Islamic banking. Most of these are wholesale banks that are used by large businesses. Some of these are Islamic finance ‘windows’ offered by high street banks.

Al Rayan Bank is the UK's oldest and largest wholly Sharia compliant retail Islamic bank. This means Al Rayan Bank is not part of any other UK bank and every part of its operations is wholly based on Sharia.

Are Al Rayan Bank’s admin fees fair?

As an Islamic bank, any charges Al Rayan Bank imposes on its customers cannot be arbitrarily high and unjustifiable. All charges must be fair and reflective of the actual cost/effort required for the Bank to undertake the activity.

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What is Islamic banking?

Islamic banking is consistent with the principles of Sharia. A key factor is that it operates without interest, which is not permitted in Islam, as money by itself is not considered to be a commodity from which you can profit.

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Is my money safe with an Islamic bank?

The Islamic banking system uses real trading activities backed with real assets. This means that Islamic banks, such as Al Rayan Bank, do not conduct business unless they have an asset to allow the transaction to be carried out.

Islamic banks are also not permitted to use financial instruments that are based on speculation, which introduce a high element of risk to a bank, and the assets and deposits of its customers. By following this asset-backed approach, Al Rayan Bank, and Islamic banking as a whole, is not exposed to the same risks as conventional banks. This is why the Islamic finance industry proved to be an ethical and resilient alternative to conventional banking after the recent financial crisis.

Al Rayan Bank also offers security and stability to its customers because it is part of a larger Islamic bank called Masraf Al Rayan (MAR). This gives Al Rayan Bank financial stability as well as access to expertise and knowledge to continue developing its range of Sharia compliant retail financial products.

Furthermore, as a UK bank, Al Rayan Bank is authorised by the Prudential Regulated Authority (PRA) and regulated by the Financial Conduct Authority and the PRA, which means it must meet all UK banking regulations. As a result, Al Rayan Bank’s products offer customers the standard regulatory consumer protection. For example, Al Rayan Bank savers who place their deposits with the Bank are covered by the Financial Services Compensation Scheme.

How is Islamic banking different to conventional banking?

The absence of interest in Islamic finance is one of the key factors that differentiate Islamic banks from conventional banks. However, there are other important differences:

- Islamic banking is asset-backed which means that an Islamic bank does not carry out business unless an asset is purchased to allow the transaction to be conducted according to Sharia.

- The business investments and the profits Islamic banks generate cannot be in/from businesses that are considered unlawful under Sharia, i.e. companies that deal in interest, gambling, pornography, speculation, tobacco and other commodities contrary to Islamic values.

- The whole premise of Islamic banking is to provide a way for society to conduct its finances in a way that is ethical and socially responsible. Trade, entrepreneurship and risk-sharing are encouraged and these are the financial principles that underpin Islamic finance and the products offered by Al Rayan Bank.

- Islamic banks have a Sharia Supervisory Committee to ensure all the transactions and operations are based on Sharia and ethical principles.

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Why should I consider Islamic banking? As a Muslim, is it necessary to switch from my existing bank?

The Qur'an makes it clear that interest, or riba, is forbidden. Conventional banking, which is interest based, is therefore not suitable for Muslims. The Qur’an does permit trade as a method of generating wealth and this is the basis for Islamic banking. It operates without interest to offer approved Sharia compliant financial products. These are based on Islamic finance principles involving trade, such as leasing, investments and partnership.

With Islamic banks Muslims can save their money, buy their homes and carry out their day to day banking in a Sharia compliant way. Some Muslim customers stay with conventional banks and simply do not keep the interest they earn. However, what they may not know is that, indirectly, this can provide funding to other customers for activities that are not permitted in Islam, including interest-based lending. For example, a Muslim customer’s deposits may be partly, or fully, used to provide an interest-based loan to fund a casino or brewery. This is not permitted according to Sharia.

Islamic banking, therefore, provides the certainty to Muslim customers that their money, which is with the bank in a savings, current or business banking account, is not being used in a way that is against Sharia principles.

Islamic finance is now widely and competitively available in the UK and consumers have a real choice about how they manage their finances. By choosing an Islamic bank, Muslims have the peace of mind that their money is working for them and still in line with their faith.

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How are Islamic banks different?

Islamic banks are based on an asset-backed system of finance and develop partnerships with their customers where risk and reward are shared. Unlike many conventional banks, Islamic banks only invest customers’ deposits in ethical activities which are consistent with the principles of Sharia.

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What are the founding principles of Islamic banking?

Islamic banks are founded on faith-based ethical principles that are derived from trade, entrepreneurship and risk-sharing. As money by itself is not considered to be a commodity from which you can profit, no interest is paid or received by Islamic banks. The ethics and values which underpin Islamic banking include inclusivity, transparency, integrity, respect and fairness.

How do Islamic banks work differently with their customers?

Unlike the conventional bank-customer relationship, Islamic banks work with their customers in partnership, sharing risk and reward.

How is Islamic banking ethical?

Islamic banks only use their customers’ deposits for investments which are permitted in Sharia. So, customers’ money will never be invested in gambling, alcohol, arms, tobacco, pornography or any interest-bearing activities. The activities of Al Rayan Bank are constantly monitored by an independent Sharia Supervisory Committee and an internal Sharia Compliance Department.

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How do Islamic banks invest?

The business investments the profits Islamic banks generate cannot be in/from businesses that are considered unlawful under Sharia, such as gambling, alcohol, arms, tobacco, pornography or any interest-bearing activities.

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I am with a conventional bank but do not take the interest. Is that ok?

Some Muslims do this. However, as conventional banks are not transparent as to where customer deposits are invested, Muslim customers can find that their money is indirectly being invested in activities which are not Sharia compliant.

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Is my money safe with an Islamic bank?

The Islamic banking system uses real trading activities backed with real assets, a relatively low-risk approach. Al Rayan Bank depositors are covered by the Financial Services Compensation Scheme (FSCS).

Why are Sharia Scholars paid a fee by an Islamic bank for their work? Does this affect their ‘independence’ and is it permissible?

Sharia Scholars are appointed by the shareholders of an Islamic bank as an independent committee. Their role is to ensure that the bank carries out all of its transactions in compliance with Sharia requirements.

They are required to audit the bank’s work from a Sharia point of view and review the bank’s products. In return for the Scholars’ time and effort they are entitled to remuneration. This is no different than for any other trained professional, such as a solicitor or an accountant, who carries out work for an organisation.

This is permissible according to Sharia and the fee paid to the scholars does not cloud their work or negate the impartiality of their advice. It merely recognises the level of expertise the organisation is receiving, which is fundamental to it carrying out its business.

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How does Islamic banking work?

The basis for all Islamic finance lies in the principles of the Sharia, or Islamic Law, which is taken from the Qur'an (the Holy Book for Muslims) and Sunnah (sayings and acts of  Prophet Muhammad peace be upon him).

Islamic banking operates without interest which is not permitted in Islam, as money in itself is not considered to have intrinsic value. As interest is income generated from money, it is seen as effortless return. Instead money must be used in a productive way and wealth can only be generated through legitimate trade and investment, which involves an element of risk.

Islamic banking therefore uses various principles recognised as Sharia compliant such as Ijara (leasing), Musharaka (partnership) and Wakala (agency agreement). Islamic banks use these principles to develop Sharia compliant financial products, such as savings accounts and home finance, which allow Muslims to conduct their finances in an Islamic way.

What’s wrong with an interest based system?

Under the principles of Sharia, the presence of interest creates an inequitable relationship between two parties favouring one over the other; this imbalance can ultimately lead to wider negative social and economic implications, as has been seen in recent years with several major global banks failing.

This is why it is forbidden in the Qur’an as generating money from money is effortless and useless approach of making money, it instead encourages trade and investment.

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How do Islamic finance products work?

Islamic banks pay profits rather than interest on savings products, and charge rental not interest on their home finance products.

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Why do Islamic banks advertise % rates for products if they do not charge or pay interest?

It is important to remember that Islamic banks are based on Sharia. Therefore, they pay profits rather than interest on savings products, and charge rental not interest on their home finance products. As a UK bank regulated by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).

Al Rayan Bank 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 Al Rayan Bank’s profit/rental 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 Al Rayan Bank 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 the HPP is 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 from Islamic banks therefore benefits the customer and their ability to make a choice about the products they wish to take.

Is it permissible under the Sharia to quote a profit rate for Fixed Term Deposit savings accounts?

It is important to clarify that this Sharia compliant savings product(s) is called ‘Fixed Term’ and not ‘fixed return’. It is usually offered under the Islamic principle of Wakala (an agency agreement). With this product, the Islamic bank provides an expected profit rate over a set period as a ‘target’ based on the investment activity it will undertake with the deposits.

The ‘Fixed’ element relates to the length of time the bank will undertake the investment activity for the customer. For example, two years for the Two Year Fixed Term Deposit Account. These savings products do not offer a fixed return in the same way that conventional banks that pay interest do.

Under Sharia, the bank cannot guarantee a rate of return, because with investment there is always an element of risk. However, Islamic banks mitigate this risk for the customer in many ways, so that the customer’s deposits and return do not suffer.

If we’re unable to achieve the expected profit rate, we will write to customers allowing them to either terminate the investment, taking their funds and the profit rate advertised up to that date, or continue with the investment at a lower expected profit rate. To date, for this type of savings product, Al Rayan Bank has always achieved the expected profit rate offered to its customers.

How do Islamic savings accounts work?

The Bank invests its customers’ deposits in Sharia compliant activities in order to generate a target profit. It does this either by becoming an agent of the customers and receiving an agreed agency fee and/or incentive, or by entering into a partnership with the customer and sharing the risk and reward.

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What does Al Rayan Bank invest its savers’ money in?

Al Rayan Bank only invests its customers’ deposits in relatively low risk commodities. Currently investments take place in trades of low risk commodities (non-precious metals), Sukuk (Islamic bonds) and property, through the Bank’s Home Purchase Plans and Commercial Property Finance.

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How does expected profit work?

Savings products offer an expected profit rate, not a fixed rate, because with investment there is always an element of risk. This is highly managed by the Bank so that the risks of not achieving the expected profit rate are extremely low.

In the 10 years that Al Rayan Bank has operated in the UK, both under its existing name and its previous name of Al Rayan Bank, it has always paid its expected (or target) profit rates, and in some cases, has paid more to its customers.

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Are savings products with expected profits rates less secure for savers?

Al Rayan Bank has never failed to achieve an expected profit rate; on occasions we have even paid more. As with all UK banks, Al Rayan Bank’s depositors are covered by the Financial Services Compensation Scheme (FSCS).

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How can you offer such high rates for savings products?

The profits that Al Rayan Bank’s savings account customers receive are a combination of the rents received from the Bank’s HPP customers and the returns from the investment activities the Bank has undertaken.

What are my savings being invested in?

Currently investments take place in trades of low risk commodities (non-precious metals), Sukuk (Islamic bonds) and in the Bank’s property investments. Savings are never invested in activities such as gambling, pornography, speculation, arms, tobacco or other commodities prohibited under Sharia.

How do Sharia compliant home / property finance (Home Purchase Plans / Buy To Let Purchase Plans) work?

Home Purchase Plans are Sharia compliant mortgage alternatives. Unlike conventional mortgage products, Home Purchase Plans are based on the Islamic finance principles of co-ownership (Diminishing Musharaka) and leasing (Ijara), rather than the lending/borrowing relationship. Therefore, HPP customers are not charged interest, which is prohibited in Islam.

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If I buy a home with a HPP, I will be charged rental and not interest. Can you explain how an Al Rayan Bank HPP works?

Al Rayan Bank has developed the Home Purchase Plan as a Sharia compliant alternative to a mortgage. The principle difference between a HPP and a conventional mortgage is that the lending/borrowing relationship does not exist. For this reason, interest does not form part of the arrangement.

As a Sharia compliant product, Al Rayan Bank’s HPPs are based on co-ownership and lease agreements arranged using separate principles of Islamic finance: With a HPP, of say 20 years, Al Rayan Bank and the customer buy the property jointly. The customer then has 20 years to buy the Bank’s share for the same initial purchase price. This is based on the Diminishing Musharaka (diminishing partnership) principle of Islamic finance. At the time of completing the joint purchase, the customer will live in the property even though a large share of it is owned by the Bank.

Therefore, until the customer becomes the full owner, they will lease the portion of the property still owned by Al Rayan Bank and pay a monthly rental to the Bank. This is based on the Islamic financing principles of Ijara (leasing). When all acquisition payments have been made and the finance has been settled, ownership of the property transfers fully to the customer and they now own their home outright, without having paid any interest.

It is also important to note that the money Al Rayan Bank uses to buy homes jointly with its customers is from Sharia compliant sources. The Bank does not use any interest-bearing products to finance customer’s homes. Instead it uses its own funds, or the savings deposits from its customers, creating a virtuous circle for everyone involved.

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How is a HPP / home finance different to a mortgage?

Al Rayan Bank and the customer buy the property as partners. The customer pays rent on the share of the property that they do not own over the duration of the term until they have acquired Al Rayan Bank’s share. At this point the title transfers from Al Rayan Bank to the customer and the customer has purchased their property without ever having paid interest.

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Does the customer own the property with a HPP / home finance?

At the onset, the customer and the bank jointly own the property. With every HPP payment the customer’s equity in the property increases and the rental element decreases, reducing the Bank’s share on a diminishing basis. At the end of the term, ownership of the property transfers to the customer outright.

Why are Sharia compliant finance products benchmarked to conventional indices such as LIBOR and the Bank of England Base Rate (BBR)?

It is important to understand that Sharia does not prohibit the use of benchmarking as long as it is a commonly recognised and easily accessible benchmark. A benchmark is an important tool in Islamic finance; Islamic banks must ensure that their products, and the prices that are charged, avoid uncertainty for the customer and are consistent with the prices of the local market.

Islamic banks therefore use BBR to price their products, as they are very widely recognised and enable them to meet these important criteria. For example, a benchmark is usually used by Islamic banks to determine the rental rates for Home Purchase Plans (HPPs). It does not have any bearing on any other aspect of the product.

An Al Rayan Bank HPP is based on the Islamic finance principles of Diminishing Musharaka (diminishing partnership) and Ijara (leasing). The benchmark does not impact these principles or the way in which a HPP works and its use does not introduce interest into the arrangement.

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Why is HPP / home finance more expensive compared to a conventional mortgage?

This is a very common misconception. In reality, Islamic home finance products, such as HPPs from Al Rayan Bank, are very competitively priced when compared to the market overall. Rental rates, whilst not the cheapest in the market, are often found in the mid-range of comparison website tables.

However, customers should not simply look for the lowest headline rate when considering a finance product for their home purchase. Islamic home finance products, such as Al Rayan Bank’s HPPs, offer customers a great overall package with other attractive features.

An example might be the low administration fee that is charged to customers, which reflects the actual cost incurred by the bank. Also, Islamic banks, such as Al Rayan Bank, often allow customers to make additional acquisition payments without imposing large, arbitrary, charges for doing so with no early settlement charges.

Overall, therefore, Islamic home finance has become more affordable and gives customers a real choice when deciding which type of product is most suitable for them.

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Why don’t Islamic banks use the local rental market rates for Home Purchase Plan products?

Islamic banks use BBR to price their products as these are the most accurate, widely accepted and consistent benchmarks for financing. This allows Islamic banks to meet the important Sharia criteria of ensuring consistency and avoiding uncertainty.

If rental rates were to be used as a benchmark, there would be too much variation. To illustrate this, rental rates fluctuate depending on a number of factors such as the condition of the property and location; rent charged for a property in London would be three or four times more expensive than a similar property in the North.

Consequently, the Islamic bank would not be able to offer a fair and consistent rental rate for its products. Not only is this against the Sharia but it would also be costlier for the customer. The use of a well-recognised benchmark therefore allows the Bank to offer better value for the customer by pricing products that are in line with the local market.

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Can a customer sell the property under a HPP at any time?

Al Rayan Bank customers have the right to sell their property at any time, with no penalties, even if they are in a Fixed Rental Rate agreement.

If I sell my property and make a profit, do I share this with Al Rayan Bank as joint purchaser?

If a customer decides to sell the property which has increased in value, the Bank forgoes its rights to a share of the profits and they are paid entirely to the customer.

If a home finance / HPP customer wishes to sell a property during a negative equity situation, can they do so and are there any conditions surrounding this?

Al Rayan Bank HPP is based on Diminishing Musharaka (Co-ownership) and Ijara (Lease) agreements. One of the important conditions for Musharaka, under Sharia, is that the partnership is formed with the objective of making a profit. It cannot be formed, by either party, with a hidden intention to create a loss for the partner.

Under the Al Rayan Bank HPP the customer has the right to request the sale of the property at any time, without incurring any penalties. The Bank will, in normal circumstances, agree to sell. Any profit made from the sale will go entirely to the customer. Al Rayan Bank will forgo its share in any profit made from the sale. However, sometimes a negative equity situation may arise when the sale price is lower than the initial purchase price.

In this instance, since the sale is resulting in a loss, the Bank, as a partner in the property, has the right, under Sharia, to refuse the sale. Nevertheless, if the customer has special circumstances and really needs to sell, they can purchase the Bank’s share for the same initial purchase price. They may then sell the property to a third party at any price they are willing to take. This, however, may result in a loss for the customer.

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Is it true that Sharia does not permit contracts to be interdependent or to have ‘two contracts in one’, as is the case with the HPP/home finance?

Sharia does not allow clauses in two contracts which make them interdependent on each other with a complicated outcome that is not Sharia compliant. This is not the basis for an Al Rayan Bank HPP which is based on independent and separate contracts, the outcome of which is straightforward for both the customer and the Bank.

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Under a HPP / home finance contract why does the customer have to pay the Stamp Duty?

When a consumer buys a property in the UK, they automatically must pay Stamp Duty, if applicable. Under the Al Rayan Bank Home Purchase Plan (HPP), the customer and the Bank jointly purchase the property. However, the ultimate owner will be the customer after they have bought the Bank’s share over a period of time. As such the Stamp Duty cost will also, eventually, have to be passed to the customer.

For Al Rayan Bank to be able to offer the HPP with a competitive monthly rental rate, it is more practical if the customer pays the Stamp Duty when the property is initially purchased. Some Islamic banks do offer to share the costs when the property is first bought. However, this results in a subsequent higher monthly rental rate to cover the bank’s extra costs.

Thus, with Al Rayan Bank the customer pays the Stamp Duty at the outset of the joint purchase to enjoy a lower rental rate over the long term. It is interesting to note that in 2003 the UK Government acted to end the double stamp duty incurred by customers buying their homes under Islamic finance principles. This helps to introduce a level-playing field for Islamic banks offering this type of home finance.

Under a HPP / home finance contract the property is ‘owned’ by the bank. If this is the case, as tenants why do the occupiers have to pay for buildings insurance, gas/electrical and general maintenance? Is this permissible?

The Home Purchase Plan (HPP) is a product which enables the customer to buy their own home in a Sharia compliant way, without interest. The overall objective of the HPP, therefore, is to allow the customer to purchase the property over a period of time, so that, ultimately, they become the owner.

For an Islamic bank to be able to offer the HPP at a competitive rental rate, it does not take on the responsibility of maintenance and insurance as part of the Ijara agreement. If the bank were responsible for carrying out maintenance, procuring buildings insurance and the subsequent administration, the rental rate would need to be higher.

This would therefore affect the customer’s long-term objective of buying their home in a Sharia compliant, and affordable, way. With an Al Rayan Bank HPP, the Bank appoints the customer as a Service Agent responsible for maintenance of the property and ensuring that it is covered by appropriate insurance. This is permissible according to Sharia and is beneficial for the customer; it means the Bank can charge a lower rental rate that is competitive with conventional banking and ultimately enables the customer to buy their home without paying interest.

Hence, the responsibility for maintenance and insurance rests with the customer, who will ultimately own the property after they have bought the Bank’s share over a period of time.

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How do I apply for a personal loan / credit card / overdraft?

Al Rayan Bank does not currently provide personal loans, overdrafts or credit cards.

What is Diminishing Musharaka?

As the customer buys our share in the property, their ownership increases, and their rental contributions therefore decrease.

What is Automatic Exchange of Information (AEoI)?

UK banks are required to collect certain tax related information from their account holders under Automatic Exchange of Information (AEoI) agreement as part of the International Tax Compliance Regulations. The legislation covers a large number of countries in order to assist tax authorities to deter and detect tax evasion.

To find out more about AEoI and the participating countries, please visit the OECD website.

What is CRS - Common Reporting Standards?

The Automatic Exchange of Information (AEoI) allows governments to exchange information through tax authorities in certain countries. This legislation is known as the Common Reporting Standard (CRS) and has been adopted in order to create tax transparency worldwide. To date, more than 100 countries, including the UK, Islands (Jersey, Guernsey, Isle of Man) and Gibraltar, have committed to adopting the CRS.

To comply with the CRS, participating countries must obtain certain customer information from their Financial Institutions and exchange that information on an annual basis with other participating countries.

For a list on which countries are participating, please click here.

How does Common Reporting Standards (CRS) affect me?

Under the CRS, Al Rayan Bank is required to identify customers who are tax resident in a participating country. If you are tax resident outside the country where you bank then we may be required to provide details, including information relating to your accounts, to the national tax authority in the country where the account is held.

Where can I find out more about CRS?

You can find out more about Common Reporting Standards (CRS) via the following websites:

• HMRC’s website
• Organisation for Economic Cooperation and Development (OECD) website

It is important to note that Al Rayan Bank cannot provide help or advice to customers on CRS or any other tax related matter. Should you wish to seek such advice, we recommend consulting an independent tax advisor.

What is FATCA - Foreign Account Tax Compliance Act?

FATCA was introduced by the United States (US) Internal Revenue Service (IRS) to identify US persons, both individuals and entities, who have US tax obligations to report their worldwide income on an annual basis, regardless of whether or not they currently reside in the US.

FATCA requires global financial institutions such as Al Rayan Bank to identify all reportable US persons within their client base and provide information on such accounts to the appropriate tax authorities.

The reports are submitted by the UK tax authority to the US IRS through the provisions of an Intergovernmental Agreement (IGA) in place. 

How does FATCA affect me?

Under Foreign Account Tax Compliance Act (FATCA), Al Rayan Bank is required to identify customers who have a US connection. If you are tax resident outside the country where you bank then we may be required to provide details, including information relating to your accounts, to the national tax authority in the country where the account is held.

Where can I find out more about FATCA?

You can find out more about Foreign Account Tax Compliance Act (FATCA) via the following websites:

• HMRC’s website
• IRS website

It is important to note that Al Rayan Bank cannot provide help or advice to customers on FATCA or any other tax related matter. Should you wish to seek such advice, we recommend consulting an independent tax advisor.

What is a TIN?

A “TIN” is a ‘Taxpayer Identification Number’ or a functional equivalent. It a unique combination of letters and/or numbers assigned by a jurisdiction to an individual or an entity and is used to identify the individual or entity for the purposes of administering the tax laws in that jurisdiction.

The United Kingdom issues two TIN-like numbers: (a) The Unique Taxpayer Reference (UTR) which is a unique set of 10 numerals allocated automatically by HMRC to both individuals and entities who have to submit a tax return. (b) The National Insurance Number (NINO) which consists of two letters, six numbers and a suffix letter A, B, C or D (for example DQ123456C). All individuals living regularly in the United Kingdom are either allocated or can be issued with a NINO.

I've received a letter and my link doesn't work?

If you've received a letter to self-certify your tax residency details, and the link on the letter is not working, please download a pdf copy of the form from alrayanbank.co.uk/tax-forms and send it to us by post to Al Rayan Bank, PO Box 12461, Birmingham, B16 6AQ.

Do I need to provide self-certification details for both the child and the guardian?

Yes, the legislation requires tax-residency details for all account holders including children/young persons, as well as the guardians.

What happens if I don't provide my tax-residency details?

If you're an existing customer and you haven't provided us your up to date tax-residency details, we may be obliged to report certain information on your account(s) periodically to the relevant tax authorities. This will be based on the information we hold about you and may not be correct for the purposes of tax residency.

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