Words the FSA uses explained
We know some of the words we use can be hard to understand for people who do not have a background in financial regulation. Below is an explanation of some of the common words or phrases the FSA uses.
We intend the definitions below to be a quick guide. We include links to fuller explanations and encourage you to use them.
Our Handbook Glossary gives the definitive versions of words or phrases used in our rules and principles.
| Term | Definition | Further information |
|---|---|---|
| Appointed representatives (AR) | A firm wanting to sell insurance but not wishing to become directly authorised can agree with an FSA-authorised firm to become its appointed representative. Although the appointed representative is not authorised or regulated directly by the FSA it still needs to meet the FSA's rules. The authorised firm becomes "the principal" and is responsible and accountable to the FSA for ensuring the appointed representative does this. The appointed representative can only carry out the business activities the principal has FSA permission to do. |
Factsheet [PDF] |
| Authorisation | The FSA process of assessing firms’ and individuals’ ability to satisfy the threshold conditions (see below) in order to become 'authorised' (admitted to the regulatory system). | Information on how to get authorised? |
| Authorised persons | This can be a firm or a person admitted to the regulatory system. Our Handbook gives a full definition. | Glossary definition |
| Financial promotions | Adverts, websites and telephone calls can all be financial promotions if they induce or encourage someone to buy an insurance product. Our rules require firms to make sure that financial promotions are clear, fair and not misleading. Financial promotions must be approved by a regulated firm. | Financial promotions - FSA web pages |
| Firms online | The web-based system used by FSA-regulated firms to submit data and application forms to the FSA. | Firms online - FSA web pages |
| FOS | Financial Ombudsman Service. The independent service for resolving disputes between consumers and financial firms. This avoids customers having to use the courts, making it speedier and cheaper for all concerned. | FOS website |
| FSCS | Financial Services Compensation Scheme. The FSCS can pay compensation to customers if a firm is unable, or likely to be unable, to pay claims against it, for example if it has become insolvent. | FSCS website |
| Handbook | Contains the principles and rules we require firms to follow in order to meet their regulatory responsibilities, together with guidance on those rules. | Handbook online |
| ICOB | Insurance: Conduct of Business sourcebook. The part of the FSA Handbook that contains the rules for motor retailers and other insurance intermediaries when they deal with customers. | ICOB sourcebook |
| IDD | Initial disclosure document. Gives customers the key information about the firm and its services. | Further information on disclosure |
| Key Rules | The main FSA rules for people that sell insurance. You can download this document from the FSA website. | Key Rules for General Insurance Brokers [PDF] |
| KYC | Know your customer. When advising customers, KYC this is also known as 'factfinding'. It refers to obtaining sufficient information about a customer's personal and financial situation before giving the advice. KYC is also used in a different way, as part of the bid to prevent money laundering. Here, KYC is the collection and use of information about a customer over and above getting basic evidence of identity. This is to prove they are who they say they are and that they are not laundering money through your business. |
|
| RMAR | The Retail Mediation Activities Return. The way the FSA finds out about the businesses it regulates, allowing them to closely monitor firms without visiting them all. Small firms have to fill in the RMAR twice a year. | |
| Smaller Businesses Practitioner Panel (SBPP) | A panel of people representing the smaller firms the FSA regulates. The panel provides input and views to the FSA on the impact and effect on small firms of what the FSA does. Look at their website to find out how to contact them. | SBPP website |
| Secondary insurance firm | A firm whose insurance business is incidental to the main business. For example, car dealers, vets, and dentists. | |
| Small firm | We classify most motor retailers as small firms. This means "small" in terms of the regulated financial business they do – not the overall size of their firm or group. Small firms have the Firm Contact Centre as their main point of contact at the FSA. | |
| Statutory objectives | The four objectives given to the FSA by the Financial Services and Markets Act 2000. The four objectives relate to: market confidence; public awareness; consumer protection; and the reduction of financial crime. | FSA Statutory objectives |
| Suitability letter | A letter sent by an adviser to a client after the factfinding exercise. The letter recommends a financial product and explains why it is suitable. | |
| Supervision | The FSA process of monitoring firms to make sure they meet regulatory requirements. | Information on how we supervise firms |
| TCF | Treating customers fairly. One of 11 Principles for Businesses the FSA has. It says "a firm must pay due regard to the interests of its customers and treat them fairly". | |
| Threshold conditions | The minimum conditions we require firms to satisfy to become authorised. Firms must continue to meet these conditions to retain permission to carry on regulated activities. You should always tell us when you go below these conditions (e.g. if the regulatory capital you hold falls below the set level). We will give you 30 days to put the situation right. | Do I need to be authorised? |
If you notice other words, phrases or acronyms in any FSA communications (e.g. web pages, letters, emails) that you find difficult to understand, please email the Small Firms Communications Team and we will consider adding them to this list.
