The bank expects to sign up some 50 IFAs and brokers after receiving a steady stream of requests. It is currently meeting up with intermediaries who have been in contact over the last 12 months and is hoping to achieve a geographical spread across key Muslim areas. The bank will pay commission based on a percentage of the drawdown for any leads generated.
HSBC has also struck up a partnership with West Bromwich, which will now refer potential customers to HSBC. Eventually, at least six of the building society's 48 branches across the West Midlands will be involved in the initiative, starting at its Cape Hill branch in Smethwick.
Customer-facing West Bromwich branch staff have been given training to help them explain the basics of the product to customers. The sales and application process will be undertaken by HSBC's team. HSBC will pay commission to West Bromwich for every lead generated.
The Midlands has a Muslim population of around 400,000. HSBC expects the most interest to come from young professionals who so far have been unable to buy a home because their religion prohibits them from paying interest. It also expects approaches from people who have had to resort to an interest-based mortgage in absence of Islamic finance in the UK.
West Bromwich is the UK's ninth largest building society, with some 48 branches in its heartland of the West Midlands. The society has been offering Sharia-compliant mortgages via Ahli United Bank since 2002, however its relationship with HSBC will enable it to offer even more choice to its customers.
HSBC became the first and only high street bank in the UK to launch an Islamic home finance product and current account last July. Since launch, the scheme has generated over 10,000 enquiries and expanded to over 27 areas, with Nottingham, Middlesbrough, Newcastle, Edgware and Coventry added this year.
The Amanah home finance scheme is suitable for clients who do not want to compromise their beliefs in order to own their own home. Under the home finance scheme, the bank buys the property and leases it back to the customer over an agreed term, usually around 25 years.
The customer makes monthly payments made up of rent and payments towards the purchase price, and a portion for buildings insurance. HSBC owns the property until the customer has made their final payment. In Islamic terms, the rent is not another name for interest; it is seen as a fair payment for use of the property rather than a charge for borrowing money.
Noaman Hasan, UK head of HSBC Amanah, says: “We hope to generate a large number of new customers a year through IFAs.
“Their deep links with the community means that they will be vital to spreading the word about Sharia-compliant products and introducing customers who might not have had previous experience of the bank.”