After two years since it began the process of securing formal regulatory recognition, equity property crowdfunder Yielders has finally gained full authorization by the Financial Conduct Authority (FCA), becoming the first Islamic fintech company in the UK, and one out of five real estate crowdfunders, to be directly regulated by the FCA.
This development is most welcomed in the fintech space, particularly in the Islamic fintech segment as it validates the proposition of Shariah compliant fintech, underscored by the rigorous accreditation process.
“There needs to be clear legal contracts drafted for transactions, a robust business model in place with sufficient stress testing applied [and] a technology platform for review with a clear technology strategy,” Irfan Khan, the founder of Yielders, explains the process to IFN Fintech. And that is even before an application is submitted.
The FCA then evaluates the application to validate its business model, client money handling and financial promotions before awarding accreditation. Individuals managing key financial promotion roles within the business are subsequently screened and trained and required to sit through a series of exams to ensure they are well equipped in discussing the listing of financial promotions.
“The process was very challenging; however, we had faith our ethical and Islamic principles would shine through in the process,” says Irfan who believes that the principles of Shariah finance support a key FCA mandate — consumer protection. “These [Islamic finance] principles ensured, as we were building the business from the ground up, we included this within legal contracts, communications on the platform and how we look to democratize the investment opportunities for an underserved community.”
Business, according to Irfan, has been growing month-on-month since it won a formal Shariah recognition by the Islamic Finance Council in March. “To date, we have not started our marketing campaign, so to meet the goals we have through organic growth is highly encouraging. We are excited about the next few months as new users and investors start to explore the platform and share their experiences with others and Yielders, so we can make our offering even better for the future.”