CII R01 key terms

The UK regulator responsible for conduct in retail and wholesale financial markets, promoting market integrity and protecting consumers. It authorises firms, sets conduct rules and can enforce sanctions.

The Bank of England body that supervises the safety and soundness of banks, insurers and major investment firms, focusing on capital adequacy, liquidity and risk management rather than market conduct.

An FCA principle requiring firms to deliver good outcomes for retail customers across products, price and value, consumer understanding and consumer support, with a foreseeable harm standard.

An earlier FCA initiative setting six consumer outcomes firms should achieve, covering culture, product design, clear information, suitable advice, and products that perform as promised with no unreasonable barriers.

Customers whose personal circumstances, such as health, bereavement, low resilience or low capability, make them more susceptible to harm, requiring firms to adapt communication and processes.

A state arising from a customer's health, life events, resilience or capability that increases the risk of detriment; it may be temporary or permanent and firms must identify and respond to it.

The process of verifying a client's identity and understanding their circumstances and source of funds before providing services, forming part of anti-money-laundering controls.

The laws, rules and procedures firms use to detect and prevent criminals disguising the proceeds of crime as legitimate assets, including customer due diligence and suspicious activity reporting.

A confidential report a firm sends to the National Crime Agency when it knows or suspects money laundering or terrorist financing, or has reasonable grounds to suspect it.

Evidence explaining where the money for a transaction or investment came from, such as salary, savings or a property sale, used to check that assets are legitimate.

The requirement that a recommendation or transaction matches a client's objectives, financial situation, knowledge, experience and risk tolerance, and that the client understands the risks.

The degree of investment loss a client is financially and emotionally able to withstand, taking account of capacity for loss, time horizon and objectives.

A client's willingness to accept uncertainty and potential loss in pursuit of higher returns, shaped by personality and experience rather than purely by finances.

A client's financial ability to absorb a fall in the value of investments without damaging their standard of living or ability to meet essential goals.

A legal obligation to act in another party's best interests, putting the client's interests ahead of the adviser's own and disclosing or avoiding conflicts of interest.

Situations where an adviser's or firm's own interests, or duties to another client, could improperly influence advice or service, and which must be identified, disclosed and managed.

Payments or benefits given to or received from third parties that could impair the duty to act in a client's best interests; they are generally banned unless they enhance service and are disclosed.

A payment made by a product provider to an intermediary for a sale, which was largely restricted for retail investment advice to remove bias and improve transparency.

The explicit fees agreed between an adviser and a client for advice and services, replacing commission on advised retail investments under the Retail Distribution Review.

A reform programme that raised adviser qualification standards, banned commission on advised retail investments and required advisers to describe their service as independent or restricted.

An advice status where a firm considers a sufficiently broad range of retail products available in the market and is free from provider ties, giving whole-of-market recommendations.

Advice limited to certain products, providers or a narrower market, which must be clearly explained to clients so they understand the scope of the service.

The Chartered Insurance Institute's ethical code, requiring integrity, competence, care, fairness, confidentiality and compliance with regulation in all professional dealings.

A formal set of values and behavioural standards a professional body expects members to follow, guiding judgement where rules are silent and supporting public trust.

The conduct, competence and attitude expected of an adviser, including continuing professional development, honesty, accountability and respect for clients and colleagues.

Ongoing structured learning that keeps advisers technically current and ethically aware, usually with a minimum annual number of recorded hours.

A certificate issued by an accredited body confirming an adviser meets qualification, CPD and conduct requirements, which retail investment advisers must hold.

An independent dispute-resolution scheme that can require firms to compensate consumers for unfair treatment, up to a statutory limit, without the need for court action.

The UK statutory safety net that pays compensation to eligible customers when authorised financial firms fail, up to set limits per person per firm.

The regulated process for recording, investigating and responding to customer complaints within set timescales, with referral rights to the Ombudsman if unresolved.

A review by firms of whether the price customers pay is reasonable relative to the benefits, quality and cost of a product, required under the Consumer Duty.

The judgement that a product's charges are proportionate to its features, service and performance, assessed at both individual and portfolio level for workplace pensions.

The fees deducted from an investment or product, such as initial, ongoing, fund management and transaction costs, which reduce net returns over time.

A fund's annual costs, including management and administration fees, expressed as a percentage of its average net assets, giving a comparable measure of running costs.

A disclosure measure of a fund's annual recurring costs as a percentage of its value, presented in a standard format to help investors compare funds.

The requirement that a financial firm holds sufficient capital relative to the risks it takes, so it can absorb losses and protect depositors and policyholders.

The risk-based European insurance regulatory framework, retained in UK law with amendments, covering capital requirements, governance and disclosure for insurers and reinsurers.

A European markets framework, largely retained in UK rules, governing investment firms, trading venues, product governance, costs disclosure and best execution.

The requirement that manufacturers and distributors define target markets, test products and review their performance so they meet the needs of the intended customers.

The 2015 reforms letting defined contribution savers from age 55 (rising to 57) take money flexibly, with the first 25% typically tax-free and the rest taxed as income.

The maximum amount that can be contributed to pensions each tax year with tax relief, reduced for high earners and subject to carry-forward rules.

A cap on total pension benefits that could build up with tax relief, historically fixed at just over one million pounds; it was abolished from the 2024/25 tax year.

A tax-advantaged savings and investment wrapper where income and gains are free of UK tax, with annual subscription limits and rules on permitted investments.

An ISA holding equities, funds, bonds and similar investments, offering tax-free growth and income but exposing the holder to market risk.

A pension where the saver and often the employer pay contributions into an invested pot, and the eventual retirement income depends on investment performance and annuity or drawdown choices.

A pension promising a set income based on salary and service, with the scheme bearing investment and longevity risk rather than the individual member.

A contract that converts pension savings into a guaranteed income for life, with rates and income depending on age, health, interest rates and any guarantees chosen.

Taking an income directly from invested pension savings, keeping the fund invested and exposed to market risk, with flexible access and tax on withdrawals above the tax-free element.

The possibility that returns differ from expectations or that capital falls in value, arising from market, credit, liquidity and other factors that advisers must explain.

Spreading investments across assets, sectors and regions so that poor performance in one holding has less impact on the overall portfolio.

The split of a portfolio between asset classes such as cash, bonds, property and equities, which largely determines its risk and expected return.