Many and probably most Shari'ah scholars are competent in both Shari'ah and finance, but most of the emphasis is placed on the former and scholars formal training in Shari'ah as well as their training with other more senior scholars (in the case of younger scholars) provides a good way for their qualifications to be established.
There is, however, not nearly as much rigor in formally testing Shari'ah scholars' expertise in finance, which is an equally important qualification for Islamic finance. Many products are complex and a Shari'ah scholar should not only be qualified to make a Shari'ah ruling on the formal structure of a product, but should also understand how different aspects of a product interacts to avoid the situation where a product may, in its parts be Shari'ah-compliant, but in its entirety become nothing more than a way to circumvent specific prohibitions, which could lead to questions later.
One example that I have referred to in the past was a product criticized by Sheikh Yusuf DeLorenzo (pdf) that used a total return swap to generate a return from a basket of hedge funds. There may be other examples, but I refer to this example mostly because DeLorenzo worked through in a public way his concern that the product generated non-compliant income by compliant means. In his conclusion, Sheikh DeLorenzo writes:
"The classical jurists have stated that whatever leads to involvement in the unlawful will either lead to the unlawful as a certainty or lead to the unlawful as a possibility. This product includes investments, even though they are entered into indirectly, that are clearly unlawful. Moreover, there is no doubt whatsoever that the transactional series leads inevitably, and repeatedly, to what is unlawful." (emphasis added)
With this product, as with any other, there is not necessarily a clear link suggesting the scholars who approved it did so because of unfamiliarity with finance, or because of the potential conflict of interest they face with any transaction where they are being paid by the issuer to make a ruling on Shari'ah-compliance that will be considered by potential investors. But there does not need to be, there just needs to be a likely perception of either for the industry to be hurt.
The accreditation by an independent body of each scholar's financial knowledge, as well as a body that can sanction scholars if they do not mitigate the potential conflicts of interest or can be ex post be shown to have not taken due care in reviewing the transaction will increase confidence in the integrity of Islamic finance. This should not be treated lightly since finance (as conventional banks are finding out after scandals involving subprime, LIBOR, sanctions evasion, etc) depends on confidence of its customers and the markets more broadly. It is also much easier to lose than it is to regain.
An independent body, which will at first be voluntary and only cover Malaysia, should be strengthened and broadened over time to cover the entire industry and to be mandatory. It will provide a strong signal for the growth and maturation of the Islamic finance industry.