Information and Guidance Flashcards
Collective investment scheme
An investment product such as a unit trust or open-ended investment company (OEIC) that lets many retail investors pool their money together
Endowment policy
An insurance product that pays out a lump sum after a specified
term or if the insured person dies before the end of the term.
Endowment policies are often used as a way of saving over the
long term
Equity
This has two meanings: a) when talking about investments, an equity is another name for the shares of a company quoted on the stock exchange; b) when talking about property, it refers to the difference between the value of a property and the amount of money still outstanding on the mortgage.
Credit union
A mutual organisation (that is, owned by its members) that provides a range of financial products to members, eg savings accounts and personal loans. Members of a credit union must share a common bond, eg all work for the same employer or all
work in the same district
Financial personality
A person’s attitude to risk and the way they manage their money. The key factor in an individual’s decision-making process when choosing a financial product.
Fixed-rate mortgage
A mortgage loan whereby the interest rate is fixed for a stated number of years at the beginning of the mortgage. This benefits the borrower if interest rates rise during the fixed period, but not if they fall
Mis-selling
When an individual or provider is negligent or reckless in selling a product to an unsuitable customer, and/or misrepresenting the contract
Money health check
An assessment of a person’s overall financial position in relation to their circumstances. It aims to anticipate future events. The Money Advice Service offers an online money health check.
Office of Fair Trading (OFT)
The government department that monitored how businesses compete with each other. It was abolished in April 2014 and its responsibilities shared between the Financial Conduct Authority and a new organisation, the Competition and Markets Authority
Restricted adviser
A professional who can recommend only certain types of product from one or a limited number of providers. They are not allowed to use the word ‘independent’ to describe their advice.
Savings bond
A savings product held for a fixed period, eg two years. The holder can only make a limited number of withdrawals, or none at all, during that period without incurring a penalty
Universal Credit
A new UK welfare benefit intended to replace the following six separate benefits: income-based Jobseeker’s Allowance; income based Employment and Support allowance; Income Support; Working Tax Credit; Child Tax Credit; and Housing Benefit. It is intended to be rolled out in stages
Payment protection insurance (PPI
An insurance product intended to ensure repayment of loans should a borrower face unexpected events that prevent them from repaying the debt.
Price comparison website
An online service that enables customers to compare financial products and thus to make informed choices.
Interest rate
The amount, expressed as percentage, that a financial services provider charges a borrower when it lends money, or pays to a saver.
