• Doing business with the FSA
  • Small Firms
    • General information
      • TCF - deadlines
      • Principles-based regulation
      • A to Z index
      • Ensuring your RMAR is accurate
      • Using a compliance consultant
      • Guide to mystery shopping
      • Supervisory priorities 2008/09
      • Frequently asked questions
      • Small firms library
      • Appointed representatives

Not removing the jargon – explaining it.

Despite our best intentions, our webpages for small firms contain the odd word, phrase or acronym that makes little immediate sense to anyone who does not have a background in financial regulation.

Given the legal nature of our business, we can't remove this completely. For instance, the Handbook glossary explains the words and phrases used in the Handbook and for accuracy it needs to refer specifically to legal definitions – which we appreciate some small firms find difficult to read.

Using plain language

In this jargon-busting guide, we have explained some of the key FSA words and phrases in plain language. The definitions below should not be regarded as complete: they are intended to provide a quick introductory reference for small firms. Links to fuller explanations are included and you are encouraged to use these. And, of course, where a term is italicised in the Handbook the Glossary definition will always apply.

More information

Not all of the terms below will be relevant to your firm. For instance, suitability letters are required for financial advisers but not for mortgage intermediaries. The guide below does not go into this level of detail: please follow the links below to read further information on each topic, or go to the Handbook or the Firm Contact Centre for information on each term.

 

The jargon

ARROW	Advanced Risk Response Operating Framework. The FSA process for assessing and dealing with risk.
Authorisation	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).
Corporate finance firm	A firm whose activities are limited to arranging and advising on the raising of capital. (link to corp fin page)
Depolarisation	The rules regarding the provision of financial advice have changed recently to facilitate competition in the market. This process is referred to as depolarisation. Following depolarisation, advisers are able to offer different scopes of advice ranging from advice on the products of a single product provider firm - through to advice across the whole of the market.
* FA	Financial adviser – collective name for MFAs, WFAs, IFAs, SFAs.
Financial Promotions	Adverts, websites and telephone calls can all be financial promotions if they induce or incite someone to engage in investment activity. Our rules require firms to ensure that financial promotions are clear, fair and not misleading, Regulating this area is an FSA investment priority and we take a proactive approach to improving industry standards of promotional material for regulated products and services.
Firms Online	Online system used by firms to submit data and application forms to the FSA.
FOS	Financial Ombudsman Service
FSCS	Financial Services Compensation Scheme
Handbook	The FSA's Handbook of Rules and Guidance which contains the rules that firms are required to follow in order to meet their regulatory responsibilities, together with guidance on those rules.
ICOB	Insurance: Conduct of Business sourcebook. The part of the FSA Handbook that contains the conduct of business rules for insurance intermediaries.
IDD	Initial Disclosure Document that firms are required to give to customers to provide them with key information about the firm and its services;
* IFA	Independent financial adviser - will provide whole of market advice and must offer customers the option to pay for advice by fee.
IRR	Integrated Regulatory Reporting: our approach to regulatory reporting which was introduced to harmonise reporting requirements.
Keyfacts documents	Documents which we require firms to give to customers and which summarise the key information that customers need to know about the firm, its services and the products they are buying. The package includes the initial disclosure document, menu (for investments), key facts illustration (for mortgages) and policy summary (for insurance policies).
Know Your Customer (KYC)	In the context of advising customers, this is also known as 'factfinding'. It refers to obtaining sufficient information about a customer's personal and financial situation before giving the advice. In the context of anti-money laundering requirements KYC is the collection and use of information about a customer over and above getting basic evidence of identity.
MCOB	Mortgage: Conduct of Business sourcebook. The part of the FSA Handbook that contains the conduct of business rules for mortgage intermediaries and lenders.
Menu	Document issued by financial advisers which indicates the cost of advice to consumers, as well as setting out payment options: fees, commission or a combination of the two.
* MFA	Multi-tied financial adviser - will advise on a limited range of products from a number of providers.
Primary firm (Insurance)	A firm whose main business is the selling of or advising on insurance.
Pure protection contract (Insurance)	Long term insurance contracts which we treat as not being investment products and so ICOB rules apply. E.g. critical illness, life insurance, income protection insurance.
RMAR	Retail Mediation Activities Return – electronic form containing details about firms and their activities sent to the FSA by personal investment firms and mortgage and general insurance intermediaries.
SBPP	Smaller Businesses Practitioner Panel provides input and views to the FSA on the impact and effect on small firms of regulatory policy and operation.
Secondary firm (Insurance)	A firm whose insurance business arises only as a result of its main business (eg car dealers, vets, dentists).
* SFA	Single-tied financial adviser - will provide advice on the products of a single product provider (or group).
Small firm	A firm that is authorised by the FSA, and is assigned to the Firm Contact Centre for ongoing supervision. The exact definition varies according to the type of firm, e.g. mortgage and general insurers with regulated activity income of less than £3m.
Small Firms Division	Division of the FSA responsible for supervising authorised small financial firms with retail customers.
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.
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	FSA process of monitoring and regulating firms to ensure they are complying with regulatory requirements.
TCF	Treating Customers Fairly – an initiative to ensure that firms meet the requirements of principle 6 to "pay due regard to the interests of [their] customers and treat them fairly".
Threshold conditions	The minimum conditions which a firm is required to satisfy, and continue to satisfy, in order to be given and to retain permission to carry on regulated activities.
* WFA	Whole of market financial adviser - advice will be based on products across the whole of the market.

 

* Since depolarisation, a set of common acronyms has been widely adopted to describe these different types of adviser and, while they do not relate to FSA rules, they are in everyday use.