AFS3513 INTRODUCTION TO SHARIAH

FINANCIAL PLANNING

SEMESTER SEPTEMBER
SESSION 2021/2022

INDIVIDUAL ASSIGNMENT: JURNAL REVIEW

TITLE : "Ethical Values in Islamic Financial Planning”

NAME OF LECTURER : PROF. DR. AZWAN BIN ABDULLAH

No Contents Page
1 Introduction 1
2 Problem Statement 1
3 Conclusion 3
Introduction

The goals of an Islamic financial plan are the same as those of a traditional financial plan: to assist
people in accumulating, protecting, and distributing their money. An Islamic financial plan, on the other
hand, is designed in conformity with Islamic beliefs and principles. People who follow these plans, for
example, should only invest in Syariah-compliant investments and should make special preparations for
zakat and hajj. This service is perfect for people who want to plan for the future while adhering to Islamic
principles. Islamic finance is based on the application of Islamic law, or Shariah, which has its fundamental
basis in the Qur'an and the Prophet Muhammad's sayings and practises. Shariah emphasises fairness and
cooperation, which is particularly important in the context of Islamic banking.

Problem

Wealth must be earned through lawful commerce and asset-based investment, according to Islamic
finance's core principles. It is clearly banned to utilise money for the goal of creating money. Next,
investment should provide a social and ethical benefit to society in addition to a financial return. The burden
of risk should be shared. Furthermore, any damaging (haram) acts should be avoided.

Islamic financial planning is based on Islamic principles and a theoretical framework. The next
section looks at some of the underlying basic elements of Islamic financial planning that Muslim financial
planners must keep in mind while providing advise to their customers. The generation of wealth, purification
of wealth, protection of wealth, accumulation of wealth, and distribution of wealth are the five components
of Islamic financial planning. These Islamic financial planning elements, which have been adopted from the
IBFIM (2016).
Islamic finance is an ethical framework in which both obligation and concern for the consequences
play a key role due to their mutual existence and interaction. Islamic finance acknowledges finance's
tangible use while also subjecting it to higher overarching purposes that place a premium on ethical and
moral behaviour that aligns with the Maqasid Al Sharah's ideals. "Islamic finance gets its major strengths
from its basic underlying principles," the IFSB wrote in its Islamic Finance and Global Financial Stability
Report, issued in 2010 in collaboration with the Islamic Development Bank and the Islamic Research and
Training Institute. The paper, authored by Dr. Zeti Akhtar Aziz, the governor of Bank Negara Malaysia,
expounded on the principles of Islamic finance, particularly the prohibitions against unethical or unlawful
action and the aims of social justice, which are fundamental characteristics of Islamic finance's "embedded
governance."
In terms of normative ethics, Islamic finance comprises both a consequentialist and a deontological
perspective. There is a responsibility to uphold high ethical standards, as well as an obligation to consider
the broader implications of the transactions sponsored. This image of ethical behaviour and broader
accountability, as envisioned by Islamic finance, differs with the idea of a company whose sole goal is to
maximise profits for its shareholders, regardless of the social or other implications of its actions. In this latter
scenario, which has served as a model for much but not all of conventional economics and finance, a firm's
only responsibility is to its shareholders, and companies need not worry about anything else.
Much of the recent arguments made to oppose the concept of corporate social responsibility have
included this notion of the bounds of ethics, or obligation, in business and finance. The fact that such a
narrow concept of responsibility is unsuitable for finance has become abundantly obvious in the aftermath
of the global financial crisis. It should be noted that there is sometimes implied that there is a significant
gap between the claims for ethical behaviour in Islamic finance—or rather, its genuine potential—and actual
practise. This point of view may be effectively studied in the context of the rising social responsibility
business, and I'd want to do so by recognising the gaps—as well as the possibility for this industry's
convergence and synergetic growth with ethical investment through Islamic finance.
Financial planning experts who adhere to ethical standards commit to deliver financial planning in
the best interests of their customers and in accordance with the highest ethical and professional standards,
as well as to maintain and promote the profession's interests for the benefit of society. When providing
financial planning to customers, financial planning experts should provide proper disclosures and agree to
be bound by ethical norms as part of their professional commitment. The ethical conduct and judgement,
as well as adherence to ethical principles, have been integrated into the worldwide requirements for CFP
certification by the FPSB. FPSB Members include information on ethical standards and their implementation
into territory-specific CFP certification requirements to ensure that these ethical commitments are
recognised. In their different areas, FPSB Members implement and enforce FPSB's ethical standards. A
globally agreed set of ethical standards for financial planning professionals, according to the FPSB, will
benefit customers of financial planning experts. Ethical values in In financial planning, Islam gives more
priority to avoid harmful elements or conditions than the benefits, thus a good ethical conduct by a financial
planner is demanded to protect the rights of the clients in getting the right advice according to the teaching
of Islam.

Conclusion

Globally, financial planning has played a key part in the well-being of people and family institutions.
Islamic financial planning is a step-by-step method for Muslims to manage their finances. These actions
will enable family institutions to manage and preserve their money in accordance with Shariah's aims.
Wealth planning can aid them in reducing the effects of pandemics like the Covid-19. Islam places a high
priority on money and encourages Muslims to manage it properly. In Malaysia, Islamic financial planning is
a critical instrument for safeguarding wealth and ensuring the well-being of family institutions. The debate
thus far has emphasised the need of Islamic financial institutions adhering to rigorous adherence to Islamic
ethical qualifications in order to sustain patronage and the comfort that consumers feel in them. In light of
their divine foundation, Islamic financial organisations' ethical values cannot be compromised. Just as it's
risky to hire a mat weaver in a silk factory thinking he's a weaver, it's likewise risky to depend entirely on
traditional rules and principles to guide mankind's financial operations. While attempting to broaden the
scope of institutions and acquire a strong market position, Islamic values and regulatory systems should
not be taken lightly. By practising virtues and avoiding vices, the Ummah is regarded as the finest
community ever formed for mankind. This should be fully utilised in order to avoid the fate of the traditional
banking institutions. In summary, the ethical norms that guide Islamic financial institutions must be
respected if they are to be a viable alternative to the existing economic system.