If any Islamic Financial Institution (IFI) has a Shariah Pronouncement from a Shariah Advisor or a Shariah Committee it means that the individuals who have signed the pronouncement are of the opinion that the product, service or transaction is in compliance with the generally accepted Shariah rules and principles 𝗮𝘀 𝗶𝗻𝘁𝗲𝗿𝗽𝗿𝗲𝘁𝗲𝗱 𝗯𝘆 𝘁𝗵𝗲𝗺.
Any indvidual signing the Shariah Pronouncement of a product, service or transaction is not encouraging you to invest or use the product but rather is just confirming that in their opinion it is Shariah compliant. Furthermore, they are not confirming to you that the product, service or transaction will be acceptable to all Shariah Advisors. This is usually mentioned in the risk factors of a prospectus or within the transaction documentation.
As an investor or customer in the Islamic finance space you are still required to do your own due diligence especially when it comes to other factors. Just because a product or service is Shariah compliant, doesn’t mean that it is economically suitable for you. Before taking on any Shariah compliant debt or before investing your hard earned money in a Shariah compliant investment, make sure that you understand how it works, even if it means hiring experts to advise you. The due diligence required for unregulated products and services is even more crucial.
I personally know of cases where customers have blamed the Shariah Committees for products that they have taken which haven’t worked out in their favour. However, the terms and conditions were very clear within the product documentation, so to blame the Shariah Committee when things go wrong is not really fair.
Another example is to complain and claim that you didn’t know about how high the management fees of an Islamic fund were, when all the fees were clearly stated in the documentation when you signed up.
Additionally, proper due diligence is required when a company is using a Prominent Muslim Figure(s) to promote their products. The level of due diligence that the Prominent Muslim Figure(s) is going to be able to do is limited. For any Shariah related due diligence they will probably depend on the Shariah Pronouncement of the company’s existing Shariah Advisor or Shariah Committee. For other commercial matters it is not usually their area of expertise, hence you should do your own research so that you don’t end up blaming the Prominent Muslim Figure(s) later if things go wrong.
