FINSIA Professional Banking Fundamentals flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Fiduciary duty

A legal obligation to act in the client's interest ahead of the adviser's own, requiring loyalty, disclosure of conflicts and avoidance of undisclosed personal gain.

Best interests duty

An obligation on a personal advice provider to act in the client's best interests and to prioritise the client's interest where a conflict exists.

Know Your Customer

The identification and verification process a bank must complete for each customer before providing services, using reliable, independent documentary or electronic sources.

Customer Due Diligence

Ongoing assessment of a customer's identity, beneficial ownership, source of funds and risk profile, triggered at onboarding and when circumstances change.

Politically exposed person

An individual entrusted with a prominent public function, or their close associate or family member, who presents higher money-laundering risk and requires enhanced due diligence.

Suspicious matter report

A confidential report filed with AUSTRAC when a bank suspects a transaction may involve money laundering, terrorism financing or other serious crime.

Threshold transaction report

A report to AUSTRAC for cash transactions of AUD 10,000 or more, including multiple smaller cash transactions that appear structured to avoid the threshold.

Conflict of interest

A situation where an employee's or firm's interest, or duty to another party, could improperly influence the advice or service given to a client.

Chinese wall

An internal information barrier separating teams, such as corporate advisory and trading, to prevent confidential price-sensitive information from flowing between them.

Confidentiality obligation

The duty not to disclose client information except with consent, where legally compelled, or where a recognised public-interest or crime-prevention exception applies.

Internal dispute resolution

A bank's documented process for receiving, investigating and responding to customer complaints within prescribed timeframes before external escalation.

External dispute resolution

Independent complaint resolution by an approved ombudsman scheme, such as AFCA, available to consumers after internal processes are exhausted or timeframes lapse.

Significant breach reporting

The obligation to notify ASIC within 30 days after becoming aware of a significant breach of financial services or credit law, following assessment and containment.

Whistleblower protection

Statutory protection allowing employees to disclose misconduct confidentially without retaliation, including protection of identity and immunity from civil or criminal liability.

Financial advice suitability

The requirement that personal advice be appropriate to the client's objectives, financial situation and needs, supported by a documented statement of advice.

Fee disclosure and consent

The obligation to disclose fees, charges and commissions clearly and obtain informed client consent before charging for services or deducting amounts from accounts.

Cash rate

The interest rate the Reserve Bank of Australia targets in the overnight money market, used as the primary instrument of monetary policy.

APRA

The Australian Prudential Regulation Authority, which supervises authorised deposit-taking institutions, insurers and superannuation funds to protect depositors and policyholders.

ASIC

The Australian Securities and Investments Commission, which regulates market conduct, licensing, disclosure and consumer protection across financial products and services.

AUSTRAC

Australia's financial intelligence and anti-money laundering regulator, which receives reports and supervises compliance with AML/CTF obligations.

Authorised deposit-taking institution

An entity approved by APRA to accept deposits from the public, including banks, credit unions and building societies, subject to prudential standards.

Common Equity Tier 1

The highest-quality capital, mainly ordinary shares and retained earnings, measured as a ratio to risk-weighted assets to absorb losses.

Risk-weighted assets

Total credit, market and operational exposures multiplied by regulatory risk weights that reflect the likelihood of loss, forming the denominator of capital ratios.

Liquidity coverage ratio

High-quality liquid assets divided by net cash outflows over a 30-day stress period, with a minimum regulatory requirement of 100 percent.

Net stable funding ratio

Available stable funding divided by required stable funding, measuring whether longer-term assets are funded with sufficiently stable liabilities over a one-year horizon.

Basel III framework

International standards on capital, leverage and liquidity for banks, structured around minimum requirements, supervisory review and public disclosure pillars.

Monetary policy transmission

The process by which cash rate changes affect money market rates, lending and deposit rates, asset prices, spending and inflation, typically with a lag.

Lender mortgage insurance

Insurance protecting the lender against loss when a borrower defaults on a high loan-to-value mortgage; the premium may be passed to the borrower.

Loan-to-value ratio

The loan amount divided by the property's appraised value, expressed as a percentage, used to assess credit risk and insurance requirements.

Serviceability assessment

The lender's evaluation of whether a borrower can repay a loan, applying an interest rate buffer and assessing income, expenses and existing debts.

Deposit guarantee scheme

A statutory protection that reimburses depositors up to a capped amount per institution if an authorised deposit-taking institution fails.

Non-bank lender

A credit provider that lends but is not an authorised deposit-taking institution, so it cannot accept deposits and is regulated differently from banks.

Payment system operator

An entity that operates infrastructure enabling the clearing and settlement of payments, subject to oversight by the Reserve Bank of Australia.