SHARI’A GUIDELINES ON MARKETING
While gharar has received a lot of attention in Islamic banking and finance, a related concept, ighra, is not so commonly known and understood in the industry. Other Shari’a rules like la tabi’a ma laisa ‘indak/ ladaik (prohibition of sale of something not owned/ possessed by the seller) are also adequately known and fairly understood.
Ighra means luring, attracting or enticing usually with deception, but not necessarily always in a negative way. The word is used both in a negative and positive sense in the Arabic language, like libis mughri (enticing dress) and ratib mughri (attractive salary).
In fiqhi (Islamic juristic) context, however, it is usually used in a negative context, implying enticing wrongly by attracting someone to a dangerous activity or an outcome. For example, by making a path in a jungle attractive to allure travellers to a place where they could be robbed. In this context, ighra is certainly not allowed.
While Shari’a scrutiny takes place at each and every stage of product development, the advice offered by Shari’a scholars is taken lightly when it comes to marketing and sale of Islamic financial products. This is by no means to suggest that Shari’a guidelines on marketing and selling are relaxed or abused. In general, Islamic financial institutions are very sensitive to the cultural requirements and ensure that their advertisements or other marketing collateral do not lead to raising of eyebrows or explicit criticism.
Most of advertisements by Islamic banks and financial institutions do not fall under the definition of ighra as they do not lead people to any negative outcome, and they are not based on any deception. Some people, however, raised the question if it is acceptable to advertise prizes attached with some of the Islamic financial products, e.g., investment accounts and other products like National Bonds in the UAE.
The promise of prizes leads the promisor to give certain prizes to those who qualify to receive it. As such it is not based on any false presumption as the prizes are given in all circumstances to those who win it. This is a view taken by the contemporary Shari’a scholars who have allowed promising and giving prizes by way of draws (e.g., National Bonds in Dubai, and numerous Islamic saving products with prizes attached).
Each and every Islamic financial/business contract has its own idiosyncratic requirements, and it is important for the sale and other staff to be aware of these so that they do not inadvertently breach them and expose their institution to what is known as Shari’a risk. For example, while attracting new customers by way of offering them some incentives in the form of cashback or loyalty points is acceptable in case of Islamic investment accounts and most of the assets-side products, it is strictly prohibited to offer such incentives in case of current accounts.
There are three aspects about which no meddling is acceptable when marketing, trying to sell, or advertising Islamic financial products:
- Price
- Object of sale
- Delivery
Fortunately, these are regulatory requirements as well in almost all the jurisdictions in which Islamic banks and financial institutions operate. Hence, any miscommunication will be deemed mis-selling and hence subject to apprehension and reprimand by the regulators and other authorities. This has been the primary reason for lack of explicit Shari’a guidelines on marketing and selling. However, it is important for Islamic financial services industry to start developing such guidelines for the sake of completeness of the regulatory framework for Islamic banking and finance.
