The major disadvantage is simply a lack of understanding and knowledge in the international finance markets. Many participants view Islamic finance as an unknown niche market, governed by contracts with strange sounding names and have a presumption that Islam disallows most forms of investment and financial activities. This is purely because they have never been involved in an Islamic finance transaction, and fail to understand that in Islam most activities are allowable, unless specifically classified as haram, i.e. harmful or disallowed. Similarly, those financial contracts with strange sounding names have largely become standardised documents as the Islamic finance industry has matured and more and more international law firms have identified Islamic finance as a possible growth area. Many of these Islamic contracts have parallels in conventional finance and, with the exception of Hedge Funds, it is difficult to identify a form of conventional financial instrument or structure that cannot be replicated in Islamic finance.
The cost of Scholars required to provide Shariah approval of the structure is often quoted as a barrier and disadvantage, but in reality most structures will be underwritten by IFI's that will already have an in-house Shariah Board to provide the review and approval. It should be noted that the approval of the structure by Scholars can be a very powerful marketing tool as investors will often see this as a validation of the structure as a suitable investment.