Covers loss from specific financial transactions and guarantees that investors in debt portfolios receive timely payment of principal and interest or guarantees in the event of default by the debtor or obligor. Financial guarantee insurances include: mortgage indemnity insurances; performance bonds; residual value insurance. Financial guarantee cover originated in suretyship.
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A surety bond, insurance policy or, when issued by an insurer, an indemnity contract and any guaranty similar to the foregoing types, under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee, or indemnitee.

A wide range of insurances developed for the financial services industry. These include bankers’ blanket bond insurance, mortgage impairment insurance, rogue trading, operational risk and organisational liability.

a contract which is in form a contract of insurance or reinsurance and under which the insured ultimately recovers the premiums paid plus the interest earned on their investment less an amount designed to cover the insurer’s or reinsurer’s expenses and profit, the time value of money thus entering explicitly into the calculation of the premiums charged; the financial element of such contracts often does not involve the transfer of any underwriting risk so there is doubt whether they are in law contracts of insurance (see also finite risk insurance).

Insures legal liability for (pure) financial loss by extending public and/or product liability cover as opposed to financial loss flowing from physical injury or damage to person or property. The extension is claims-made, subject to an excess or co-insurance and has a separate annual aggregate limit of indemnity. Liquidated damages are excluded. The financial loss extension under product liability cover includes the efficacy risk. The main insuring clause of the public liability policy covers financial loss following accidental obstruction, accidental nuisance, etc.

an independent organisation set up under the Financial Services and Markets Act 2000, covering firms and activities regulated by the Financial Services Authority, which replaced a number of former complaints handling schemes.

A ‘free to consumers’ dispute resolution service with three divisions: banking and loans, insurance and investment. Firms are bound when the Ombudsman makes decisions in favour of the consumer up to £100,000 plus interest, above which the Ombudsman may recommend full payment. Decisions are not binding on the consumer. FOS can also direct firms to take any steps deemed just. The FOS is funded by a general levy on all firms covered by its service. Membership is compulsory for all authorised firms. The Pensions Ombudsman operates separately.

CII qualification accepted by the FSA as proof that a candidate has the level of knowledge required to become a financial adviser. Holders are eligible to join the Society of Financial Advisers.

Regime introduced under FSMA, s.21. A financial promotion is the communication, in the course of business, of an invitation or inducement to engage in an investment activity. It is unlawful if it is not made by an authorised person or has not been approved by such a person. ‘Communication’ embraces all forms of communication in place of previous separate rules for insurance advertisement, unsolicited calls, etc.

the Act which created a unified regulatory framework in the UK for financial services, including insurance, under which functions and powers are conferred on the Financial Services Authority.