Financial Services Authority

Website: http://www.fsa.gov.uk/

The Financial Services Authority (FSA) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. They are a company limited by guarantee and financed by the financial services industry.  The Treasury appoints the FSA Board, which currently consists of a Chairman, a Chief Executive Officer, three Managing Directors, and 9 non-executive directors (including a lead non-executive member, the Deputy Chairman). This Board sets our overall policy, but day-to-day decisions and management of the staff are the responsibility of the Executive.

The FSA is accountable to Treasury Ministers, and through them to Parliament. It is operationally independent of Government and is funded entirely by the firms it regulates. The FSA is an open and transparent organisation and provides full information for firms, consumers and others about its objectives, plans, policies and rules.

Our Property - Find out UK house prices for free!

Website: http://www.ourproperty.co.uk/

The website has been updated with the latest sales data from both the Land Registry of England and Wales, and the Registers of Scotland. This update includes over 109,000 new sales and around 3,500 updated past sales in England and Wales, and over 16,000 added sales in Scotland.

Financial Terms Glossary

The A to Z of Financial Terms.

Absolute owner
This is the sole owner of a piece of property, such as a building, vehicle or piece of equipment.

Abstract of title
This is a document which summarises all the title deeds to a property such as a house. It is drawn up for the seller when a property is being sold.

Accounting date
Organisations prepare their annual accounts covering a period of 12 months. The last day of the period is called the accounting date.

Accrual rate
This is the rate by which a pension from an earnings−related occupational pension scheme
builds up from one year to another. The rate is shown as a fraction or a percentage of the member's final yearly salary.

Accrue
If something is accruing, it is building up day by day. If an organisation owes money for goods and services but has not received a bill up to the date it prepares its accounts, it will estimate what it owes. It will then include the debt in its accounts. This estimated liability is called an accrual.

Accrued income security
This is a security (investment) which pays interest at regular intervals. When it is sold, interest may have built up and this interest will be paid to the new owner. Interest built up like this is called accrued interest.

Accumulation date
This is the date when income will be credited to a unit trust which reinvests its income (an accumulation unit), instead of paying the income out to the investors.

Accumulation unit
The type of unit trust which reinvests the income it earns, instead of paying it out immediately to the investors, is called an accumulation unit.

Actuary
An actuary is an expert on pension scheme assets and liabilities, life expectancy and probabilities for insurance purposes (the likelihood of things happening). An actuary works out whether enough money is being paid into a pension scheme to pay the pensions when they are due.

Ad valorem
If a duty is ad valorem the duty varies with the price of the asset which is being transferred.

Additional voluntary contribution
People in occupational pension schemes can pay in extra money to increase their pension benefits. The extra money they pay in is an additional voluntary contribution.

Ademption
This happens when someone is left something in a will, but the item no longer exists so cannot be bequeathed.

Administration order
If a court appoints someone to look after a company's affairs the court issues an administrationorder. This order gives the person appointed power to run the company.

Administrator
This is someone who:
· has been appointed to manage the affairs of a bankrupt business; or
· has been appointed to manage the estate of someone who has died without leaving a will.

Advance corporation tax
Until 1999 this tax was paid by companies on the dividends they paid. The advance corporation tax paid could usually be offset against the corporation tax due on the company's profits.

AER
This stands for annual equivalent rate. It is quoted by financial institutions, such as banks, to show how much the interest rate would be if the interest was worked out just once a year. It is intended to make it easier for people to judge how much interest they pay (or receive) when it is being worked out more than once a year. It is also intended to make it easier to compare different financial products.

Affidavit
An affidavit is a written statement which is sworn to be true by the person signing it. It is sworn before someone authorised by the court.

Allocation rate
When money is paid into a fund (such as a pension fund) the allocation rate is the percentage of the money left which can be invested after the charges have been taken off. For example, if the charges were 2% the allocation rate would be 98%.

Allotment
An allotment of shares in a company gives the owner (of the allotment) an unconditional right to buy the shares at a fixed price.

Alternate director
If a director appoints someone to take his or her place, the substitute is called an alternate
director.

Annual accounts
These are the summary of an organisation's financial transactions during the year covered by their accounts, and a 'snapshot' of the assets and liabilities at the end of the year.

Annual general meeting (AGM)
This is the yearly meeting of the members of an organisation which must be held to meet legal conditions. The annual accounts are presented for approval at this meeting.

Annual management charge
This is a yearly charge made by the managers of unit trusts or investment trusts. It is usually a percentage of the value of the funds being managed.

Annual payment
An annual payment is an amount paid out every year, such as an annuity. It may be split up into smaller amounts and be paid out more frequently than once a year.

Annuity
An annuity is an amount paid out every year to someone. The money usually comes from an insurance policy. It can be split up into smaller amounts and paid out more frequently, such as monthly. It is usually paid for the rest of the beneficiary's life.

APR
This stands for annual percentage rate. It is intended to give people a more accurate idea of how much they are being charged when they borrow money.

Arbitrage
This is borrowing money to lend out again at a higher rate of interest.

Arrangement fee
This is the fee that banks charge their customers for arranging an overdraft facility.

Articles
A company's articles set out its rules. The articles form part of the memorandum and articles of association.

Assets
These are things which are owned such as buildings, vehicles, stock and money in the bank.

Assignment
This is the formal transfer of rights to something. For instance, a bank's customer may assign, to
the bank, the right to receive the benefits from a life insurance policy to give the bank security for a loan.

Attorney
An attorney is a person appointed to act for another person (such as when someone is unable to look after their own affairs). A formal document called a power of attorney is used to appoint the attorney.

Audit
An audit is an independent examination of an organisation's records and financial statements
(report and accounts) to make sure that:
· the financial statements show a fair reflection of the financial position at the accounting date;
· the income and spending is shown accurately;
· the financial statements meet any legal conditions; and
· the financial statements are drawn up clearly.

Auditing standards
The organisations which regulate auditors, such as The Institute of Chartered Accountants in England and Wales, set standards which have to be followed during an audit. These are called
auditing standards.

Auditor's report
This is a report and opinion, by an independent person or firm, on an organisation's financial records.

Authorised share capital
This is the highest amount of share capital that a company can issue. The amount is set out in the company's memorandum of association.

BACS payment
BACS stands for Bankers Automated Clearing System which is a system for sending money electronically between banks. A BACS payment happens when money is sent electronically from one bank account to another.

Bail
If someone is given bail, they are let out of prison until their court case. Usually someone has to pay, or promise to pay, an amount of money as a condition of bail being granted. If the accused person does not appear at the trial, the court can keep the money put up for bail.

Bailee
A bailee is the person or organisation which looks after valuable items to keep them safe for the owner.

Bailiff
A bailiff is an officer of the court. The bailiff carries out the court's orders, such as taking goods belonging to a debtor and selling them to get money to pay the debts. The bailiff can also personally deliver (serve) court documents on people.

Bailment
This involves transferring possession of goods from the owner to someone else. The ownership of the goods is not transferred.

Bailor
A bailor is the owner of valuable items which are in the possession of another person or organisation for safekeeping.

Balance sheet
A balance sheet is a summary of an organisation's financial position. It lists the values, in the books of account on a particular date, of all the organisation's assets and liabilities. The assets and liabilities are grouped in categories, to paint a picture of the organisation's strengths and weaknesses.

Balloon payment
Some loan and finance agreements have lower repayments than normal in return for a high final payment. This is called a balloon payment.

Bankruptcy
If someone cannot pay their debts when they are due to be paid, a court may issue a bankruptcy order against them. This order takes ownership of the debtor's property away from the debtor and allows much of the property to be sold. The money raised is divided between the creditors following strict rules.

Bare trustee
A bare trustee holds property ‘on trust' for another person until asked to return the property.

Barter
This is a way of paying for things, without using money, by exchanging goods.

Basic−rate tax
Once you have used up all your tax allowances and all your lower−rate tax band, you pay basic−rate tax. The basic rate is 22% at the moment (2007).

Basic state pension
This is the retirement pension the Government pays to people who have paid enough national insurance contributions. Some people may receive a reduced basic state pension because they have not paid enough contributions.

Bear
A bear is someone who expects share prices to fall in the future and sells shares now so that they can buy them back later at a lower price.

Bearer
The bearer of a document is the person who has it in their possession.

Beneficial interest
If something really belongs to a person, even though they do not legally own it, they have a beneficial interest in it. If, for instance, parents hold an investment on behalf of their child, they are the legal owners but the child is the beneficial owner of the investment.

Beneficiary
This is someone who benefits from a will, a trust or a life insurance policy.

Benefit statement
If employees are in an occupational pension scheme, they receive regular benefit statements which explain how much pension benefit they have earned.

Benefits in kind
If an employee or a director gets benefits (perks) from their work, such as a company car, the benefits are called benefits in kind. They may have to pay tax on the value of the benefit in kind.

Bequeath
If you bequeath something, you leave it to someone in your will. You cannot bequeath land or real property but you can devise them.

Bequest
A bequest is something given in a will, other than land or real property.

Bid/offer spread
This is the difference between the bid price and the offer price.

Bid price
If you are a member of a unit trust, this is the price you will get for each unit if you cash them in.

Bill of exchange
A bill of exchange is a signed written order, instructing the person it is addressed to pay an amount of money to someone. A cheque is a type of bill of exchange.

Bill of lading
This is a document recording the goods a ship carries and the terms the goods are carried under.

Bill of sale
A bill of sale is a document which transfers ownership of goods from one person to another.

Bona vacantia
This means belonging to nobody.

Bond
A bond is a written promise to repay a debt at an agreed time and to pay an agreed rate of interest on that debt.

Bonus issue
If a company offers free shares to its shareholders in proportion to their existing shareholdings, it is called a bonus issue (or a scrip issue). The company accounts for it in its books by transferring the face value of the shares from the reserves to issued share capital.

Book debts
Book debts are the debts owed to a business, as recorded in the business's accounting records.

Book value
This is the value of a fixed asset, such as a building or machine, as recorded in an organisation's books. It is usually the amount paid for the asset less an amount for depreciation.

Books of account
These are the books which a business must keep to record its financial transactions accurately.

Bought note
Stockbrokers produce bought notes for their clients. The bought note shows details of the investments the broker has bought for the client, including the price paid and any commission and duty charged.

Breach of duty
A breach of duty is failing to carry out something which is needed by law (or doing something the law forbids).

Breach of trust
A breach of trust happens if a trustee does something which is against the trust's rules or fails to do something needed by the trust's rules.

Brokerage
Brokerage is the commission earned by brokers.

Budget
Each year, the Chancellor of the Exchequer presents to the UK parliament estimates of the Government's income and spending for the following year. The budget also sets out the financial policies the Government will follow.

Bull
A bull is someone who buys shares now because they expect the price to rise in the future. After the price has risen they may sell the shares at a profit.

Buying charge
This is the charge made when you first invest in a fund such as an ISA, OEIC or unit trust.

Call
A company makes a call when it asks buyers of its new shares to pay some or all of the share price. When this happens the shares are being called up.

Called−up share capital
When a company issues shares it asks the buyers to pay for part or all of the share price. The name for this request is a call and all the shares called are the company's called−up share capital. When calls have been made for the whole of the share price and the shareholders have paid, the shares become paid−up share capital.

Cancelled from inception (CFI)
This phrase refers to a contract for an investment product (such as a personal pension) which has been cancelled within the 'cooling−off' period.

Capital adequacy requirement
Banks and some other financial organisations have to have a certain amount of capital to make sure that there is enough money to support their business. It is called the capital adequacy requirement.

Capital allowances
You can sometimes claim capital allowances when you buy long−term assets, such as machines, to use in your business. You claim part of the cost each year against your profits, before your tax is worked out.

Capital charge
If a unit trust manager takes the management charges out of the fund's capital instead of the income it has generated, it is called a capital charge.

Capital commitment
If, before the end of its financial year, an organisation has agreed to spend money after the end of its accounting period on buying fixed assets, it is called a capital commitment. This is shown in the financial statements.

Capital expenditure
If you spend money buying or improving fixed assets, it is called capital expenditure.

Capital gain
You make a capital gain if you sell or dispose of a long−term asset (such as a building) for more than it cost you.

Capital gains tax
This is a tax charged on certain capital gains.

Capital receipt
This is money received from selling fixed assets, such as buildings or machines.

Capital redemption policy
A capital redemption policy is a life insurance policy which is linked to an investment such as a unit trust.

Capital Transfer Tax (CTT)
This was introduced in the 1970s to tax money and assets given away by people during their lifetime, as well as on the estates of people who died. Its name was later changed to inheritance tax.

Card
This is the plastic credit card or cash card which banks give their customers to use.

Cardholder
This is a bank customer who has been given a credit card or cash card.

Cash card
A cash card can be used to draw money from automated teller machines (cash machines).

Cash ISA
You can invest money in a cash ISA to earn tax−free interest.

Cash option (or commutation)
If you are in a pension scheme and take this option, you will receive a lump sum straightaway. However, you will then get a lower pension than if you had not had the lump sum.

CAT standard
The Government has created a system to show which ISAs meet stated standards for charges, access and terms. The ISAs which meet these will have reached the CAT standard.

Caveat
A caveat is a warning.

Caveat emptor
This is a Latin expression which means 'buyer beware'. It is used to warn people buying goods that they may not be able to get compensation if the goods they buy are faulty.

Chancellor of the Exchequer
The Chancellor of the Exchequer is a Government minister responsible for raising money for the Government, mainly through taxes, and for controlling money spent by the Government.

CHAPS
This stands for Clearing House Automated Payments System. It is a computer system which allows payments to be made electronically. The payment goes from the paying bank to the receiving bank on the same day.

Charge card
A charge card is a type of credit card. It is often issued by a store to its customers so that the
customers can buy goods from the store on credit.

Charge certificate
The Land Registry issues this certificate to the legal mortgagee (the lender) who has lent money on the security of registered land. It is proof of the legal mortgagee's right to the security.

Chargeable asset
This is an asset on which capital gains tax may have to be paid, if it is sold or disposed of.

Chargeable event
If a chargeable event happens, it may create a tax (tax bill).

Charging clause
If this clause is written into a trust, trustees can charge the trust for their services.

Charity
A charity is an organisation set up to help needy causes.

Cheque
A cheque is a written order, addressed to a bank, instructing the bank to pay an amount of money to the person or organisation named on the cheque. The bank also has to take the amount from the relevant account.

Cheque card
This type of card is issued by a bank to a customer. It guarantees that a cheque used with the card will be paid if the person issuing the cheque has kept to all the conditions.

Chief rent
A chief rent is money charged regularly on land, but it is not rent.

Close company
A close company is one controlled by five people or fewer or by its directors.

Collateral
If there is a main security for a debt, such as a house securing a mortgage, any extra security supplied is called collateral.

Collector of taxes
After the inspector of taxes has worked out how much tax is owed, the collector of taxes sends tax demands for the money and collects it from the taxpayer.

Commercial paper
Large organisations which are regarded as soundly based financially can borrow money for the short term without giving any security. The document which confirms the debt is known as commercial paper.

Company pension scheme
This is a pension scheme organised by the employer to provide pension benefits for the employees.

Compensation
Compensation is money given to make up for damage caused.

Completion
When there is a contract to sell land, the completion happens when the land is conveyed to the person buying it in return for the receiving the rest of the purchase price.

Compound interest
Compound interest is interest on the money lent, plus interest on any interest already added to the loan.

Condition
A condition is an essential part of an agreement. The agreement or contract may collapse if a condition is broken.

Consumer Credit Act 1974
This act sets out the rules which lenders must follow when they lend amounts of £15,000 or less to consumers.

Contingent annuity
This is an annuity which is paid to someone when someone else dies.

Contingent liability
This is money which might be owed if a particular event happens.

Contract
A contract is an agreement between two or more people (or groups) to do (or not to do)
something. The agreement can be enforced by law.

Contract in
Members of occupational pension schemes can contract in to the state earnings related pension scheme (SERPS) by paying full national insurance contributions. When they retire they will be able to draw their occupational pension as well as their state earnings related pension.

Contract out
If someone contracts out of the state earnings related pension scheme (SERPS), they pay less national insurance. Instead they pay into a private pension scheme which has to meet certain conditions.

Conversion
This is changing the type of bank account you have.

Conveyance
This is the name of the document which transfers the ownership of land.

Conveyancing
This is the name for carrying out all the actions needed to transfer the ownership of a piece of land.

Corporate body
This is a group of people acting together. The group has a separate legal identity to the individual members' identities. A company is an example of a corporate body.

Corporation tax
This is a tax companies pay on their profits.

Council Tax
This is a tax charged locally on private houses. It provides some of the money to run local councils.

Coupon
A coupon is a dated piece of paper attached to a bond. The coupon has to be surrendered (given back) to get the interest or dividend on the bond.

Covenant
A covenant is a contract.

Credit
A credit is:
· money received;
· income from selling goods or services; or
· an entry on the right−hand side in a double−entry bookkeeping system.

Credit agreement
This is a written contract between a bank or other lender and a customer. The bank allows the customer to borrow money under the terms and conditions in the agreement.

Credit card
A credit card is an identity card issued by a lender, such as a bank, to a customer. The card allows the customer to buy on credit.

Credit limit
This is the most a customer is allowed to borrow on their account.

Credit reference agency
This is an organisation which keeps records of people's credit agreements and how well they keep to them. Banks and other organisations use these agencies to check on people before lending them money.

Credit scoring
This is a way of working out the risk of not being repaid if money is lent. Points are awarded for the answers given by the potential borrower to a series of questions. A high score means that the risk of them not being able to repay is low.

Credit transfer
A credit transfer involves transferring money from one bank to another.

Creditor
This is someone who is owed money.

Critical illness cover
This is a type of insurance cover which pays out if the policyholder gets a serious illness such as heart disease or cancer.

Cum−dividend
If a share is sold cum−dividend, the buyer will receive the dividend declared just before they bought the share.

Cumulative market capitalisation
This is the total market capitalisation of all the companies in the sector under review.

Current assets
These are short−term assets which are constantly changing in value, such as stocks, debtors and bank balances.

Current liabilities
These are short−term liabilities which are due to be paid in less than one year, such as bank overdrafts, money owed to suppliers and employees' PAYE.

Damages
Damages is the name for money awarded by a court as compensation.

Data Protection Act 1984
This act sets out the rules which an organisation has to follow when they store personal information about people.

De facto
De facto means in fact or in reality.

Debenture
This is a document issued by a company which acknowledges that some or all of the company's
assets are security for a debt (usually to a bank). It is also a name for certain long−term loans to companies.

Debit
A debit is:
¨ a payment (such as out of a bank account);
¨ the cost of buying goods or services; or
¨ an entry on the left−hand side in a double−entry bookkeeping system.

Debit card
A debit card is an identity card issued by a bank to a customer which the customer can use to buy goods. The price of the goods is charged to the customer's bank account.

Debt securities
These are debts which can be bought and sold, such as debentures.

Debtor
This is someone who owes money.

Default
If someone defaults, they fail to do something which they had agreed to do.

Deferred taxation
This is tax which is expected to be paid at some time in the future but is not due in the short term. Payment has usually been postponed because of tax relief.

Defined contribution pension scheme
In this type of pension scheme the amount of the pension which will be paid out depends on how much has been invested and how well the fund has performed.

Dependant
A dependant is someone who depends on someone else for financial support.

Deposit account
This is a bank account in which money is saved. It normally pays interest on the money invested.

Deposit rate
This is the rate of interest customers earn on money they keep in a bank deposit account.

Depreciation
Depreciation is the drop in value of an asset due to wear and tear, age and obsolescence (going out of date) as recorded in an organisation's financial records.

Depreciation provision
This is money set aside (or provided) in a set of accounts to reflect the drop in value of fixed assets caused by wear and tear, age and obsolescence (going out of date).

Determination
Ending an agreement is called determination.

Devise
Devise means to leave land in a will.

Direct debit
This is a payment out of a bank account which is arranged by the organisation which receives the money.

Directors' report
Every year, company directors have to prepare a report for the company's members, to explain what the company has been doing and their plans for the future.

Discretionary trust
In this type of trust the trustees can decide who will benefit from the trust and how much they will get.

Disposal
This happens when something is sold, transferred or given away.

Distribution
If a company pays money (or other assets) to its shareholders, it is making a distribution. When a company pays a dividend it is making a distribution.

Dividend
If a company has profits to share out, it can pay a dividend. The shareholders get so much dividend for each share they own.

Dividend warrant
When companies pay a dividend they send each shareholder a dividend warrant which gives information about the dividend such as the class of share, the amount of the dividend and the tax credit.

Domicile
Your domicile is the country where your permanent home is, even if you are living somewhere else for now.

Domiciled
This means permanently based in a country.

Drawee
In the case of a cheque, this is the bank that will pay the cheque. (In other words, the bank which will pay the amount written on the cheque.)

Drawer
This is the person or organisation which has drawn a cheque.

Duty
Duty is a levy charged by the Government, usually when things are bought, such as shares or buildings.

Earnings−related
If something, such as a pension contribution, goes up in line with increases in earnings, it is described as earnings−related.

Easement
An easement is a right to use someone else's land, such as a right of way.

Effects not cleared (uncleared effects)
When cheques have been paid into a bank account, but the money for them has not yet been received from the banks they are drawn on, they are called uncleared effects.

Emoluments
These are your earnings and they include benefits in kind (such as company cars).

Employer's liability
Employers have to take out insurance cover, called employer's liability insurance, to cover claims by employees against the employer for damage caused to them while they are at work.

Endorsement
An endorsement is a change to a contract, such as an insurance policy, so that the original terms are changed.

Endowment policy
If you have this type of insurance policy, it will pay out a lump sum on a fixed date in the future, or when you die, if this happens earlier.

Enduring power of attorney
If a person is capable of dealing with their own affairs at present, they can sign an enduring power of attorney. It will only come into effect when they are no longer capable of looking after their own affairs. It gives authority to the person appointed to act for the person who signed the power of attorney.

Equitable mortgage
When a person takes out this type of mortgage they still own the property which is security for the mortgage. They can occupy or live in the property.

Equity
Equity is the value of something (such as a house) less money owing on it.

Eurocheques
These are cheques issued by banks in Europe which are used with a eurocheque card.

Excess
This is the amount by which someone has gone over their agreed overdraft facility. It is also the first amount of any claim an insurance policyholder has agreed to pay.

Exchange control
The Bank of England controls the flow of currencies in and out of the UK. It buys and sells our currency in to try and keep the exchange rate with other currencies within certain limits.

Exchange equalisation account
This is an account kept by the Bank of England. It holds the United Kingdom's foreign exchange and gold reserves.

Exchange of contract
When land is sold, the person selling (seller) and the buyer both sign identical copies of the contract and exchange them. The contract is then binding on both of them.

Exchange rate
The exchange rate is the value of one currency compared to another. For example, one pound sterling might buy 300 Portuguese escudos.

Exclusion
If an insurance policy does not provide cover for certain things, it will list them and call them exclusions.

Ex−dividend
If a share is sold ex−dividend the seller will receive the dividend declared just before it was sold.

Execute
This means to carry out a contract.

Executed
If a document is made valid (in the eyes of the law), such as by being signed or sealed, it is executed.

Executor
This is a man appointed in a will to deal with the estate, according to the wishes set out in that will.

Executrix
This is a female appointed in a will to deal with the estate, according to the wishes set out in the
will.

Exempt
If something is exempt from tax, no tax can be charged on it unless the law is changed. Zero−rate is not the same as exempt. The tax on something zero−rated is 0% at the moment. However, the Government could change it to another rate, such as 2% or 7%, without having to change the law.

Facility
This is the agreed amount that a bank will allow a customer to borrow up to.

Final dividend
Once a company has drawn up its annual accounts the directors can work out and declare, or recommend to the shareholders, the amount of the final dividend.

Finance lease
Under this type of lease the organisation leasing the goods is treated as if it owns the goods. It gains the profits that would come with ownership but it also suffers the losses.

Financial statement
This is a statement which includes the annual accounts, directors' report and so on.

Financial year
This is the year covered by a set of annual financial statements.

Fiscal
This word is used to describe finances controlled by the Government.

Fixed asset
A fixed asset is one which is intended to be used for several years. Examples are buildings, machinery and vehicles.

Fixed interest rate
This is an interest rate which does not change during the life of a loan.

Floating charge
A floating charge is used to provide security for money lent to a company. The charge is over the company's liquid assets(such as stocks and debtors) but it is only triggered by an event such as liquidation.

Floating exchange rates
These are exchange rates between currencies which are allowed to go up and down in line with supply and demand. The countries concerned do not attempt to maintain a particular exchange rate.

Forbearance
This is when one party to an agreement does not pursue their rights even though another party to the agreement has not kept to the agreement's terms.

Force majeure
This is an event which cannot be controlled and which stops duties, under an agreement, being
carried out.

Foreign exchange
This is the term for foreign currencies which are bought and sold. The markets for buying and selling the foreign currencies are called foreign exchange markets.

Franked investment income
This is a company's investment income which has tax credits relating to it.

Free−standing AVC
This stands for free−standingadditional voluntary contribution. If someone is in an employer's scheme, which is not contracted out of SERPS, they can contract out themselves and pay into a free−standing additional voluntary contribution scheme (FSAVC).

Fully paid share
A share becomes fully paid when the company issuing it has received all the money due for the share.

Fund management charge
The managers of funds (such as investment trusts and unit trusts) make charges which are a
percentage of the value of the investments they are managing.

Gift
A gift is a transfer of goods or property which is free of charge.

Gilt−edged securities
These are first−class securities such as government stocks or local authority stocks.

Gross domestic product
This is the value of goods and services produced by an economy over a particular time period.

Gross interest
This is interest which has not had any income tax taken out of it.

Gross profit
Gross profit is the difference between the selling price of goods and what they cost to buy.

Ground rent
A ground rent is a rent created by a long−term lease of land.

Guarantee
A guarantee is sometimes needed before a bank will lend money to a customer. Another person (the guarantor) pledges to the bank, in writing, that if the customer does not repay the debt then the guarantor will.

Guaranteed minimum pension
This is the lowest level of pension which must be paid to a pensioner, as a condition of contracting out of SERPS.

Headline rate
This term refers to information which is easy to publish but which may be over−simplified and, as a result, possibly inaccurate.

Hire purchase
This is a form of credit which allows the purchaser to have possession of the goods shown in the hire purchase agreement. Ownership passes to the purchaser when they have paid all the instalments and any fee.

Holding company
This is a company which controls another company, usually by owning more than half of its shares.

Hypothecation
This happens when a person gives a bank authority to sell goods which have been pledged as security for a loan.

Incapacity benefit
Incapacity benefit is paid to people who are too ill to work.

Income and expenditure account
This account records an organisation's income and spending and shows the surplus or shortfall.

Income drawdown
Under this system, people with personal pensions can take money from their personal pension fund instead of using the fund to buy an annuity.

Income tax
You pay this tax according to how much income you have under various categories.

Income unit
This is a unit trust which pays out the income it earns to the investors, instead of reinvesting it.

Incorporated
If a company is formed which has its own identity separate from the identities of its members, it is incorporated.

Incorporation
This means forming a company. Some companies have limited liability. In other words, the members of the company are not personally liable for debts which the company runs up, as long as the company is run properly.

Indemnity
If someone promises to compensate someone else for loss or damage, it is called an indemnity.

Independent financial adviser (IFA)
This is a qualified person or firm that can give people independent advice on life insurance and pensions and is not tied to a particular company.

Indexation
This means making adjustments to allow for the effects of inflation.

Individual Savings Account (ISA)
This is a savings account which was introduced 6 April 1999. The income earned by the money
invested will be free of tax. In each tax year you can invest in:
¨ up to three different types of mini ISAs; or
¨ one maxi ISA.

Inflation
This is the name for general price increases.

Inheritance tax
This tax is charged on certain gifts, and on the value of the estate left by someone who has died.

Input tax
This is the value added tax you pay when you buy goods and services.

Insolvent
If debts cannot be paid when they are due for payment, the person or organisation owing the money is insolvent.

Inspector of taxes
This is a person who works for the Inland Revenue, dealing with tax returns and tax assessments. Tax inspectors check how much tax the taxpayers owe.

Insurance
When policyholders pay premiums to buy insurance cover, the company receiving the premium
agrees to pay for the policyholder's loss if a certain event happens.

Intangible assets
Intangible assets cannot be touched. Examples are goodwill and patent rights.

Intellectual property rights
This is the general name for rights such as copyrights and patents.

Interest rate swaps
If you are earning variable interest on money you have deposited at your bank, but you are worried that interest rates will drop in the future, you can change your investment to earn a fixed rate of interest. This will protect you from falling interest rates and it is called an interest−rate swap.

Interim dividend
The directors of a company can review the company's performance part way through the financial year and declare a dividend. This is called an interim dividend.

Intestacy
This happens when someone dies without leaving a will. Their estate is divided up between their relatives following the rules set by law.

Investment grade issuers
These are soundly based companies of the highest quality.

Investment trust
This is a company which is quoted on the stock exchange and which invests in other companies.

ISA
This is an individual savings account. The interest earned from an ISA is free of tax.

Issued share capital
This is share capital which has been allocated to shareholders who have subscribed for (asked for) shares.

Joint lives
Some life insurance policies cover two people's lives and pay out on the first death.

Joint lives last survivor
This sort of life insurance is on two people's lives and pays out on the second death.

LAPR
This stands for life assurance premium relief. Before 14 March 1984 there was tax relief on life insurance premiums paid by policyholders for policies which qualified for tax relief. Policies which started before 14 March 1984 still qualified for tax relief on the premiums paid since 14 March 1984.

Lapse
If a policy becomes void because conditions have not been kept to (such as failing to pay
premiums), it has lapsed.

Legacy
A legacy is a gift left to someone in a will, but it does not include land.

Legal mortgage
When a person takes out this type of mortgage the lender owns the property which is mortgaged, until the mortgage has been repaid.

Letter of credit
This is a letter one bank sends to a second bank asking them to pay money to a named person. However, certain conditions must be met.

Liabilities
These are debts that a person or an organisation owes.

Licensed conveyancers
These are the only people, other than solicitors, who are allowed to do conveyancing and charge a fee for it.

Lien
A lien is the right to keep possession of something, owned by someone who owes a debt, until the debt has been settled.

Life assurance (or insurance) policy
This type of policy is a contract between the policyholder and the insurance company. The insurance company will normally pay out if the policyholder dies.

Life assured
This is the person whose life is assured.

Life of another
If you take out assurance cover on another person's life, you have taken it out on the life of another.

Limited company
This type of company limits how much its members will have to pay if the company is wound up. The members of most limited companies will only have to pay any money unpaid on their shares. If a company limited by guarantee is wound up, the money its members have to pay is limited to the amount shown in the memorandum.

Limited liability
If a company is set up with limited liability for its members, a limit is put on how much the members would have to pay if the company was wound up.

Liquidation
This is the process of winding up a company by paying its creditors and distributing any money left among the members.

Lower earnings limit
If you earn below this limit, you do not pay national insurance contributions.

Mandate
A bank's customer writes instructions on the mandate for the bank to follow when operating the customer's account.

Market capitalisation
If you multiply the number of ordinary shares a company has issued by their market price, you get the market capitalisation value of the company.

Mature/maturity
If an investment policy comes to the end of its life, it has reached maturity.

Maxi ISA
A maxi ISA includes investments in stocks and shares and may also allow investments in cash and life assurance. An individual can invest up to £7000 in 2000/2001 in a maxi ISA and up to £5000 in the following years.

Median
In statistics the median is the point where half the items in a series are on one side and half on the other side. For example, a series of numbers might be 1, 3, 5, 7, 11. Five is at the median point. Median is not the same as average.

Member
The shareholders of a company are its members.

Memorandum and articles of association
The memorandum gives details of a company's name, objects (purposes) and share capital. It also sets out the limits of the shareholders' liability if the company has to be wound up. The articles set out the members' rights and the directors' powers.

Merchant bank
This is a specialist bank which deals in foreign exchange and advises large companies on mergers, takeovers, raising capital and so on.

Middle−band earnings
These are earnings between lower−band earnings and upper−band earnings.

Mini ISA
There are three types of mini ISA you can invest in, these being cash, life assurance and stocks and shares. The income earned will be free of tax.

Minority interest
If more than 50% of the shares in a company are held by a holding company, the remaining shares are the minority interest.

MIRAS
This stands for mortgage interest tax relief at source. It was income tax relief on mortgage interest paid (up to the limit allowed), and the mortgage repayments were reduced to allow for it.

Mortgage
A mortgage is using a property as security for a debt.

National insurance contributions
Most employees, employers and the self−employed pay national insurance contributions. The National Insurance Fund pays out benefits such as Jobseeker's Allowance, retirement pensions and Widow's Benefit.

Negotiable instrument
This is a document which :
¨ is signed;
¨ is an instruction to pay an amount of money;
¨ can have its ownership changed by changing the name it is paid to; or
¨ can have its ownership changed simply by being delivered to its new owner.

Net book value
This is what an asset cost, as recorded in the books of account, less all the depreciation taken off the asset for age and wear.

Net interest
This is interest which has had income tax taken off it.

Net profit
This is the profit left after all overheads have been taken off.

Net relevant earnings
These are the earnings of self−employed people or earnings of people who are not in an employer's pension scheme. Net relevant earnings are used to work out the highest amount which can be invested in a pension scheme and qualify for tax relief.

Nominal damages
When token damages are awarded because little damage has been done, they are called nominal damages.

Non−profit
A non−profit organisation is one which is not intended to make a profit, such as a credit union.

Note
A note is a document acknowledging that a debt exists and promising to repay that debt.

Occupational pension scheme
This is a pension scheme organised by an employer to provide pension benefits for employees.

Offer price
This is how much people have to pay for each unit when investing in unit trusts.

Official receiver
This is a person appointed to act as a receiver in bankruptcies and company winding−up cases. The Department of Trade and Industry appoints official receivers.

Open ended investment companies (OEICs)
An OEIC is a type of unit trust but there is no difference between the bid price and the offer price. In other words the buying price and the selling price is always the same.

Operating lease
Under this type of lease, ownership of the leased goods stays with the lessor (the company leasing out the goods).

Operating profit (or loss)
The profit (or loss) from a company's principal (main) trading activity.

Opting out
If an employee leaves an occupational pension scheme, or chooses not to join one, it is called opting out.

Option
Under this sort of contract, paying an amount of money gives a right to buy or sell goods at a fixed price by a particular future date.

Orders not to pay
If a bank's customer asks the bank not to pay a cheque, the bank may write 'orders not to pay' on the cheque before it is sent back.

Ordinary resolution
If a resolution can be passed at a meeting by more than half of those voting agreeing to the resolution, it is an ordinary resolution.

Out of date
If a cheque is dated more than six months before the date when it is presented for payment, the bank may refuse to pay it.

Output tax
This is the value added tax (VAT) charged by a business registered for VAT, on the goods and
services it sells.

Overdraft facility
If a bank agrees to let a customer borrow from the bank by taking out more than the customer has in the bank, an overdraft is created. The bank puts a limit on how much the customer can borrow and this is called the overdraft facility.

Paid−up share capital
This is the money paid on shares allotted to the members.

PAYE
An employer collects income tax and national insurance are collected from employees' pay and pays it to the Inland Revenue. This system is called Pay As You Earn (PAYE).

Payee
This is the person money is being paid to.

Payment countermanded
If a bank's customer asks the bank not to pay a cheque, the bank may write 'payment countermanded' on the cheque before it is sent back.

Payment protection insurance
This insurance covers people's finance agreement repayments if they cannot work because of long−term illness or redundancy.

Pension benefits
The pensions and lump sums people receive from their private pensions are called pension benefits.

Pension mortgage
This is a mortgage which will be repaid out of the lump sum from a pension policy or retirement annuity.

Pensionable age
This is the age people have to reach to be entitled to draw their state pension.

PEP
This stood for personal equity plan. It was a way of investing in stocks and shares through a Government scheme.

Permanent assurance
This is life assurance cover on someone for the rest of their life.

Permanent health insurance
This is a type of insurance policy which pays an income if the policyholder suffers from a long−term illness or disability.

Personal allowance
People do not have to pay income tax on all their income. Everyone gets a tax allowance which allows them to have some income they do not have to pay tax on. However, the amount varies depending on personal circumstances.

Personal guarantee
This is a pledge by a person to a bank to repay a debt if the bank's customer fails to pay it.

Personal pension
Self−employed people or people who are not in an occupational pension scheme can take out these pensions.

Personal representative
If someone dies, a personal representative is appointed to deal with the dead person's estate. If there is a will, the executors appointed will be the personal representatives. If there is no will, the courts will appoint someone.

PIN
This stands for personal identification number. It is a secret number given to an account holder to be used when they put their credit card or cash card into an automatic teller machine (ATM). If the number they use is correct, they will be allowed access to their account.

Please represent
If a bank has refused to pay a cheque because there was not enough money available in the customer's bank account, it may mark the cheque 'please represent'. It will do this if there is likely to be enough money to pay the cheque in a few days time.

Pledge
If someone pledges goods, they let a second person take possession of the goods, but the person pledging the goods still owns them. It is often done as security for money owed or to make sure that something is done as promised.

Poll
When a company has a poll vote, each shareholder has one vote for each share they own.

Post−dated
If a cheque is written with a date in the future, it is 'post−dated'.

Post−dated (no represent)
If a cheque is returned unpaid with this written on it, the bank will not honour it if it is represented.

Power of attorney
A power of attorney is a document which gives power to the person appointed by it to act for the person who signed the document.

Premium
This is the money the policyholder pays to the insurance company in return for the cover set out in the insurance policy.

Prepayment (prepaid)
In a set of accounts this means something which has been paid out which covers a period after the end of the accounting period. You may have paid an insurance premium for the year to 30 September. If your accounting year ends on 30 June, 3 months of your premium will be prepaid.

Present
When a bank sends a cheque it has received to the bank which has to pay it, it is 'presented' for payment.

Principal activity
This is a company's main trading activity.

Private limited company
A private limited company cannot sell its shares to the public and is not listed on the stock exchange.

Pro rata
This means in proportion to. For example, if ten items cost £100, you would expect three items to cost £30, if they were pro rata.

Probate
When someone dies, the executors of the dead person's estate apply to the court for authority to deal with the estate. This authority is called probate.

Profit and loss account
A profit and loss account shows the money a business has earned from selling goods and services, less the money spent on goods, services and overheads.

Promissory note
This is a written promise to pay an amount of money to someone at a given time or on demand.

Prospectus
If a public company wants to people to invest in it, it prepares a prospectus giving details of its past performance and its plans for the future.

Provision
When accounts are being prepared and an amount needs to be set aside for liabilities which are known to exist, but which cannot be measured accurately, the amount set aside is called a provision.

Proxy
This is a person appointed by a shareholder to go to a meeting of shareholders. The proxy can vote at the meeting for the shareholder.

Proxy form
If a proxy form is delivered to the company at least 48 hours before the shareholders' meeting, the person who is the proxy will be able to vote at that meeting.

Public liability
This is a type of insurance cover to protect people and businesses from claims made by members of the public.

Public limited company (plc)
A public limited company can offer its shares to the public and is often listed on the stock exchange.

Purchased life annuity
A person can buy this type of annuity from an insurance company by paying a lump sum.

Put option
This is a right to sell foreign currency at a particular exchange rate.

Qualifying policy
This is a policy which can pay its proceeds, free of tax, if the conditions have been met.

Quartile
In statistics the quartile point is the spot where one quarter of the items in a series is on one side and three quarters are on the other side. For example, if a series of numbers was 1, 3, #, 4, 5, 7, 10, 20 and 30, the quartile point (#) would be between 3 and 4.

Quorum
A quorum is the lowest number of qualifying people needed for a meeting to be valid.

Rate of risk
If an investment carries more risk it is expected to deliver better returns than a lower−risk investment.

Real property
This is land and rights over land (such as an easement).

Receivership
If a company defaults in repaying a secured debt, the debtor may appoint a receiver to sell the assets secured until enough money has been raised to repay the debt. The company is in receivership while the receiver is appointed.

Redemption
Redemption means paying off all the money borrowed under an agreement.

Refer to drawer
A bank writes 'refer to drawer' on a cheque which it will not pay. The bank sends it back (returns it) to the branch of the bank with the account the cheque was paid into.

Refer to drawer−please represent
If this is written on a cheque which is returned, the bank sending the cheque back expects that there may be enough money available in the bank account to pay the cheque when it is presented again.

Related party
This is someone, or an organisation, which controls or significantly influences another organisation.

Remedy
This is using the law to get compensation for damage done or for rights infringed. A remedy is also using the law to prevent something from happening.

Rent
Rent is the term used to describe a payment for using land, buildings or equipment.

Rentcharge
This is the name for a charge to use land such as a chief rent but it does not include tenancies and leases.

Representations
These are facts borrowers give to lenders about themselves when they apply to borrow money.

Reserves
These are amounts set aside in one year's accounts, which can be spent in later years. Some types of reserve can only be spent if certain conditions are met.

Retained profits (or losses)
Retained profits are those profits earned by a business which have not yet been spent.

Retirement annuity
Retirement annuities are still in existence though none have been started since June 1988. They were taken out by self−employed people or employed people who were not in an employer's pension scheme.

Reversion
If the owner of a piece of freehold property leases it to someone else for a period, the freehold property is in reversion during the period of the lease. In other words, reversion is the owner's right to retake possession when the lease ends.

Rights issue
This is an issue of extra shares by a company. Existing shareholders can buy extra new shares in proportion to the shares they already hold. The shares are usually on sale at a price lower than the stock−market price to encourage shareholders to buy. The shareholders can sell the rights if they do not wish to use them.

Schedule A
Schedule A rules were used to work out income tax on certain rents and other income from land.

Schedule D
Self−employed people's income tax is worked out using the tax rules in Schedule D.

Schedule E
Employees' and directors' income tax is worked out using the rules in Schedule E.

Scrip dividend
Sometimes companies will offer to pay dividends in shares instead of cash if shareholders want this.

Scrip issue
If a company offers free shares to its shareholders in proportion to their existing shareholdings, it is called a scrip issue (or a bonus issue).

Security
This is something of value which is pledged to a bank by a borrower. If the borrower fails to repay the debt, the bank can sell the security and repay the debt out of the proceeds of the sale.

Securities
This term is used for stocks, shares, debentures and so on where there is a right to receive interest or dividends from the investment.

Self−assessment
This is a system for taxpayers to work out the tax they have to pay. However, if they send their tax returns to the Inland Revenue in good time, the Inland Revenue will do the calculations.

Share capital
Share capital is the money invested directly in a company by its members (shareholders).

Share certificate
This document certifies who owns shares in a company. It gives the type and number of shares owned by the shareholder and lists the serial numbers of the shares.

Share premium account
If shares are issued for more than their face value, the extra amount over face value is called a share premium. The total of all the share premiums is credited to a share premium account in the company's books.

Show of hands
If voting is on this basis, each person who can vote has one vote only.

Sickness Benefit
Sickness Benefit has now been replaced by Incapacity Benefit.

Sine die
If a meeting is adjourned sine die, no date has been set for it to be continued.

Sold note
Stockbrokers produce sold notes for their clients. The sold note shows details of the investments sold for the client, including the sale price and any charges taken.

Sole trader
A sole trader is someone who is in business on their own. They have no business partners and
they do not trade through a company.

Sort code
Each bank branch is given an identification number which is called a sort code. The sort code is used on cheques and other bank documents to identify the bank branch.

Spot rate
This is the exchange rate for foreign−exchange transactions which are being done straightaway.

Stakeholder pension
The Government has announced plans for the stakeholder pension which is a type of personal
pension. There will be a rebate which will reduce the employee's national insurance contributions and the rebate will be invested in the stakeholder pension.

Stamp duty
Stamp duty is a tax on the transfer documents for certain types of transaction. Examples are the buying of shares, patent rights and properties.

Standard & Poors
This organisation rates companies according to their financial strength.

Standing order
This is an instruction by a bank's customer to the bank, to pay an amount of money regularly to another bank account.

State earnings related pension scheme (SERPS)
People working for an employer can earn this extra state pension. They pay extra national insurance as their earnings rise above a lower limit and some of this extra national insurance is for the increased pension.

State pension scheme
The Government pays a basic state pension to everyone who has paid the minimum national insurance contributions.

Statistical sampling
This involves the randomly choosing of items to be tested, and then using probabilities (the likelihood of things happening) to decide the acceptable rate of error for the test to be treated as successful.

Statutory accounts
Statutory accounts are company accounts which have been filed with the Registrar of Companies.

Statutory audit
By law, certain companies have to have their accounts audited by suitably qualified accountants. This is called a statutory audit.

Statutory books
By law, companies must keep books of account to show and explain all their transactions. These are called statutory books.

Statutory Sick Pay
Employers have to pay this to employees who are off work because of sickness. The Government sets Statutory Sick Pay rates.

Stockbroker
A stockbroker buys and sells stocks and shares for clients.

Stock control
Stock control is a system for keeping adequate control of stock levels and for preventing stock losses.

Stock exchange
A stock exchange is a market for stocks and shares. Organisations can raise capital by selling
securities through a stock exchange.

Stock in trade
This is the term for goods bought but which have not yet been sold.

Sub judice
If something is sub judice, it is being dealt with by the court and cannot be discussed outside the court.

Subscribers
Subscribers are the people who set up a limited company.

Subsidiary
A subsidiary is a company controlled by another company. The control is normally a result of
having more than 50% of the voting rights.

Superannuation
This is a regular contribution to a pension scheme by an employee.

Surcharge
This is an extra charge banks make if a customer does not keep to their agreement with the bank. It is also a penalty charged if tax is not paid on time.

Surety
A surety is someone who takes responsibility for someone else's debts or promises, and guarantees that they will be paid or undertaken.

Surrender value
If a policyholder cancels a life policy early, the insurance company will pay the policyholder an amount of money called the surrender value.

SWIFT payment
SWIFT stands for Society for Worldwide Interbank Financial Telecommunications and it is an international system for p