Statutory tribunal, within the Court Service, operating as a court of first instance. Persons disciplined by the FSA have the right to go to the Tribunal. The burden of proof attaches to the FSA. Usually there is an oral hearing on the substantive issues. The Tribunal’s decision on fact is final but points of law may be appealed. The Tribunal can award costs against the applicant or the FSA. The Tribunal consists of a legally qualified chairman and two industry members.

an independent body that regulates the financial services industry in the UK; it was set up by the Financial Services and Markets Act 2000 and is accountable to Treasury Ministers; it is financed by the financial services industry; its statutory objectives are to maintain confidence in the financial system, promote public understanding of the financial system, secure appropriate degrees of consumer protection for consumers, and reduce financial crime.

The UK’s statutory financial regulator. Almost all kinds of financial services firms must secure FSA authorisation. It regulates and monitors banks, building societies, friendly societies, Lloyd’s, credit unions, insurance and investment firms (stockbrokers and fund managers) and independent financial advisers. The FSA does not cover loans, credit and debt, and does not regulate occupational pension schemes. The FSA has powers to investigate, discipline and prosecute, and can impose unlimited fines on anyone guilty of market abuse. The FSA’s four objectives are: maintaining market confidence; promoting public understanding of the financial system; protecting consumers; fighting financial crime. See FSA HANDBOOK. (Visit www.fsa.gov.uk).

a statutory fund of last resort for customers of regulated firms, set up under the Financial Services and Markets Act 2000.

Compensation scheme for private customers of financial services firms that have gone out of business. If possible, FCSC transfers UK policyholders to new insurers but otherwise compensates them for their unexpired premiums. Compensation also covers unpaid claims. Compulsory third party motor insurance and employers’ liability is compensated in full; in non-compulsory insurance (e.g. household or general) the first £2,000 is fully compensated with 90 per cent of the remainder. Under long term business, the first £2,000 is fully protected plus 90 per cent of the value of the policy in liquidation. The scheme is funded by an industry levy.

Proportional multiyear reinsurance differing from a conventional quota share. The insurer cedes an agreed percentage of unearned premium but the reinsurer’s liability is finite, i.e. capped by an aggregate amount. The reinsurance is structured to assist the cedant’s solvency position by paying a large amount of commission in the early stages and smaller amounts at the end.

general business contracts which include both underwriting risk and elements of financial insurance/reinsurance.

Similar to financial reinsurance but has more risk transfer. It is a retrospectively rated rein surance in which the reinsurer’s liability is finite, i.e. capped. The multi-year contract enables the reinsurer to smooth the cedant’s losses over time by providing funds for paying losses that are eventually restored to the reinsurer under an adjustable clause. The cedant gets credit enhancement by an improvement in key ratios. Investment income is an underwriting component. Finite products include: finite quota share; loss portfolio transfers; time and distance; adverse development cover; spread loss cover; financial quota share.
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A form of retrospectively rated reinsurance in which the reinsurer’s ultimate liability over the term of the contract is typically limited to no more than 300 percent of the premium ceded. Its primary objectives are to stabilize earnings and reduce reinsurance costs.

Named peril ‘own damage’ cover added to a third party motor vehicle. The property damage cover is against damage caused by fire and theft risks only. The cover could stand alone if the vehicle is out of use.