CISI IISI key terms

The quality of acting honestly and consistently with ethical principles, even when unobserved or when dishonesty would be more profitable. In financial services it underpins trust between firms, clients and regulators.

The shared values, norms and behaviours that shape how a firm and its staff make decisions. A strong culture rewards doing the right thing rather than only hitting targets or maximising short-term profit.

Situations where a person or firm has competing interests that could improperly influence advice, dealing or decisions. Firms must identify, manage, disclose or avoid them so client interests are not unfairly harmed.

Payments or benefits, such as commission or gifts, given to or received from third parties in connection with a service. Rules restrict them to ensure they do not bias advice or encourage unsuitable recommendations.

Trading securities using material, non-public information about an issuer, or passing such information on. It is a criminal market abuse offence because it undermines fair and orderly markets.

Behaviour that damages market integrity, including insider dealing, unlawful disclosure of inside information and market manipulation. Regulators investigate it and can impose criminal or civil sanctions.

Internal information barriers that separate teams within a firm, such as corporate finance and trading, to prevent confidential information flowing between them. They help control conflicts and reduce insider dealing risk.

Raising concerns internally or with a regulator about wrongdoing, such as fraud or unsafe practices. Effective protections encourage staff to speak up without fear of retaliation and help firms detect problems early.

A legal obligation to act in another party's best interests, placing the client's interests ahead of your own. It typically covers loyalty, care and full disclosure of relevant information.

The requirement to recommend or transact only what fits a client's objectives, knowledge, experience, financial situation and risk tolerance. Firms gather client information and assess it before advising.

An assessment of whether a client has the knowledge and experience to understand the risks of a product they request without advice. Where they lack it, the firm must warn them.

The process of collecting and keeping up to date information about a client's circumstances, objectives and risk appetite. It supports suitability assessments and effective ongoing service.

A client's willingness and ability to accept investment losses or volatility in pursuit of returns. It combines financial capacity with psychological attitude and shapes suitable asset allocation.

A regulatory principle requiring firms to deliver fair outcomes for clients across products, advice, charges and complaints. It focuses on culture and outcomes, not just compliance with individual rules.

A UK regulatory standard requiring firms to act to deliver good outcomes for retail customers in products, price and value, consumer understanding and consumer support. It raises expectations above mere disclosure.

Clients whose circumstances, such as health, bereavement, low literacy or financial stress, make them more susceptible to harm. Firms must adapt communication and service to achieve fair outcomes.

A person's ability to manage money, understand financial products and make informed decisions. Low capability can increase vulnerability and the need for clear, simple explanations.

The UK regulator responsible for conduct in retail and wholesale financial markets, protecting consumers, market integrity and competition. It authorises firms and enforces conduct rules.

The UK regulator, part of the Bank of England, that supervises the safety and soundness of banks, insurers and major investment firms. It focuses on financial stability rather than market conduct.

A UK framework assigning explicit responsibilities to named senior individuals and requiring firms to certify the fitness of key staff. It aims to improve accountability for conduct and decisions.

The risk that a firm's behaviour or decisions cause harm to customers, markets or the firm itself. Managing it involves culture, incentives, product design and effective controls.

The requirement that a firm holds enough capital to absorb losses and remain solvent. Regulators set minimum ratios to protect depositors, policyholders and the wider financial system.

The ease with which an asset can be bought or sold without significantly moving its price, or a firm's ability to meet cash obligations as they fall due. Both meanings matter in regulation and investing.

Controls firms use to detect and prevent criminals disguising the proceeds of crime as legitimate funds. Measures include customer due diligence, monitoring transactions and reporting suspicious activity.

Someone entrusted with prominent public functions, or a close associate or family member, who poses higher corruption risk. Firms apply enhanced due diligence and monitor their relationships more closely.

Shares representing ownership in a company, giving holders a residual claim on profits and assets plus voting rights. Returns come from dividends and capital growth but are not guaranteed.

Debt securities where the issuer borrows from investors and promises interest and repayment of principal. Prices move inversely with yields and are sensitive to credit and interest rate risk.

The income return on an investment, usually expressed as an annual percentage of its price. For bonds it reflects coupon and price, and rising yields generally mean falling bond prices.

A pooled fund where many investors' money is combined and managed by a professional according to a defined strategy. Investors own units and share gains, losses and costs proportionately.

A pooled fund that creates or cancels units as investors buy or sell, so its size changes. Prices typically reflect net asset value, and liquidity depends on the underlying assets.

A UK listed closed-ended company that invests in other companies' shares or assets. Its own shares trade on an exchange and may stand at a premium or discount to net asset value.

The total value of a fund's assets minus its liabilities, usually expressed per unit or share. It is the reference point for pricing open-ended funds and judging discounts on closed-ended funds.

Dividing a portfolio among asset classes such as equities, bonds and cash to balance risk and return. It is a major driver of long-term outcomes and should reflect client objectives.

Spreading investments across assets, sectors or regions so that poor performance in one holding is offset by others. It reduces specific risk but cannot remove market-wide risk.

Risk that affects the whole market, such as recessions, interest rate changes or geopolitical shocks, and cannot be eliminated by diversifying. Also called market risk.

The risk that a borrower or bond issuer fails to pay interest or repay principal as agreed. Investors demand higher yields from issuers perceived as riskier.

The risk that changes in interest rates reduce the value of an investment, most directly for bonds and rate-sensitive shares. Longer-dated fixed income is generally more exposed.

A firm's obligation to take all sufficient steps to obtain the best possible result for clients when executing orders, considering price, cost, speed and likelihood of execution.

A firm that continuously quotes prices at which it will buy and sell a security, providing liquidity to other participants. It earns the spread between its bid and offer prices.

A relationship in which one party acts on behalf of another, creating duties of loyalty, care and disclosure. In finance, brokers and advisers commonly act as agents for clients.