CeMAP Module 3 (ASEW) flashcards
CeMAP Module 3 (ASEW) · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Affordability stress test
- An assessment of whether the customer can still afford repayments if interest rates rise, applied to variable and discounted products under MCOB 11.6.
- Suitability report
- A written record stating the customer's needs and objectives, the recommended product, why it is suitable, and why alternatives were rejected.
- Self-employed income evidence
- Typically SA302s or tax year overviews plus accounts, often for two to three years, used to establish sustainable income for affordability.
- Vulnerable customer
- A customer whose circumstances (health, bereavement, low capability, debt distress) increase the risk of harm, requiring adjusted communication and documented reasonable adjustments.
- Repayment mortgage
- A mortgage where each payment covers interest plus capital, so the balance reduces to zero by the end of the term.
- Interest-only mortgage
- A mortgage where payments cover interest only; the capital must be repaid at term end from a verified repayment vehicle.
- APR
- The annual percentage rate includes the interest rate plus certain fees, allowing comparison of the total cost of credit across products.
- Early repayment charge
- A fee charged for repaying more than the allowed amount or redeeming during a fixed or discounted period, often a percentage of the balance.
- Loan-to-value
- Loan amount divided by property value, expressed as a percentage; lower LTV bands usually attract lower interest rates.
- Decreasing term assurance
- Life cover whose sum assured falls roughly in line with a repayment mortgage balance, providing death cover at lower cost.
- Income protection
- Cover that replaces a proportion of income, typically up to around 50-70% of gross, after a deferred period when the policyholder cannot work.
- Critical illness cover
- Pays a lump sum when the policyholder is diagnosed with a defined condition that meets the policy wording, not on any illness.
- Buildings insurance
- Cover for the structure of the property, usually required by the lender, with the sum insured based on rebuild cost rather than market value.
- Consumer Duty
- FCA rules requiring firms to act to deliver good outcomes for retail customers across products, price and value, understanding and support.
- MCOB
- The FCA sourcebook governing mortgage advice, disclosure, affordability, arrears handling and repossessions for regulated mortgage contracts.
- Financial Ombudsman Service
- The independent dispute resolution scheme that can consider complaints after the firm's final response, with awards capped at a statutory limit.
- Initial disclosure document
- A pre-advice document setting out the firm's status, the services offered, fees and whether the adviser is independent or restricted.
- Source of funds
- Evidence of where the money for a specific transaction came from, required under customer due diligence before the transaction proceeds.
- Source of wealth
- Evidence of how the customer's overall wealth was accumulated, required for higher-risk cases and enhanced due diligence.
- Suspicious activity report
- A report of suspected money laundering or terrorist financing sent to the National Crime Agency via the firm's nominated officer; tipping off is a criminal offence.
- Politically exposed person
- A person entrusted with prominent public functions, or their associate, who presents higher money laundering risk and requires enhanced due diligence.
- UK GDPR
- Data protection law requiring a lawful basis, data minimisation, accuracy, retention limits and secure handling of personal data, alongside the Data Protection Act 2018.
- Leasehold tenure
- Ownership of a property for a fixed term of years, subject to ground rent and service charges; short remaining leases can restrict lending.
- Stamp duty land tax
- A tiered tax on property purchases in England and Northern Ireland, with an additional surcharge for additional dwellings; Scotland and Wales have devolved equivalents.
- Private residence relief
- Relief that can reduce or eliminate capital gains tax on the disposal of a property that has been the owner's main home.
- Rental cover
- The ratio of expected rent to the mortgage interest payment at a stressed rate, typically required to be 125-145% in buy-to-let lending.
- Lifetime mortgage
- An equity release loan secured on the home where interest is rolled up and repaid from the sale of the property, with a no-negative-equity guarantee.
- Home reversion plan
- An equity release arrangement where the customer sells a share of the property at a discount to market value in return for a lump sum or income.
- Shared ownership
- A purchase of a share of a property with rent paid on the remainder; affordability is assessed on the share, rent and service charge together.
- Staircasing
- The process of increasing the owned share in a shared ownership property, usually in defined increments, until full ownership is reached.
- Repayment vehicle
- The investment or savings plan intended to repay the capital of an interest-only mortgage; it must be credible, verified and recorded on file.
- Audit trail
- The documented record of fact-find, research, suitability letter, customer acknowledgement and reasons for any deviation, evidencing professional judgement.