B
Bancassurance. General term describing the broader financial services activities of banks and building societies, in particular their 'insurance company' activities.
Bare Trust. A Trust where the Trustee has no obligation except to pass the trust assets to the beneficiaries at their request e.g. upon reaching majority.
Bargain. This is another word for a transaction or deal. It does not imply that a particularly favourable price was obtained.
Basic Pension. The flat rate state pension available from State Retirement Age to those who have contributed sufficient NI contributions.
Basic Rate Tax. Under the unified system of taxation introduced in April 1973 there are now three levels of taxation; a lower rate, currently at 20%, the basic rate of 25%, and a higher rate of 40%.
Balance Sheet. A statement of the financial position of a business at a particular point in time.
Bears. These are pessimistic city dealers who think investments are going to fall after rising a few points. Therefore they sell their investments in the hope of buying them back at a lower price.
Bear Market. An investment market term meaning that the value of investments is expected to fall.
Bed & breakfast. Is the process of selling shares on one day and then buying them back on another (usually the following day), for tax purposes. This is established stockmarket practice designed to enable alert investors to minimise their Capital Gains Tax (CGT) bills.
Beneficiary. Someone who will receive the proceeds from a trust or settlement.
Benefit. The money paid by the life insurance company when a claim is made.
Benefits Agency. The Executive agency of the DSS responsible for distribution of information concerning various State benefits.
Benefits in Kind. Refers to non-cash forms of employee benefit such as pension scheme membership, car packages, and so forth.
BES. See Business Expansion Scheme
Best Advice. A generic expression referring to the regulatory requirement of a financial adviser to offer suitable and timely advice relevant to a clients needs.
Betterment. The principle by which a claimant has to make a payment towards the cost of the claim because his or her property will be in better condition after repair than before the loss or damage occurred.
Bid price. The price at which a Market Maker will buy stocks and shares, and a unit manager trust will buy units in his fund(s).
Bid/Offer Spread. Investment funds managed on a unitised basis differentiate between a low bid or buy-back price and the higher offer or sell price in order to use the difference to recoup some of the management expenses.
Bill of Exchange. A paper document indicating that one party (the drawee) agrees to pay the drawer the sum of money noted on the bill on demand or on a specified date e.g. a bank note, or a cheque.
Board Resolution. A binding decision made by the directors of a company.
Bonds. A generic description for a wide range of insurance policies with low protection element and high investment content. It is a loan agreement with a company or the Government (i.e. the company or government issues bonds) whereby there is an arranged repayment to the investor when the loan matures and the investor receives interest throughout the life of the loan. See Gilt edged securities.
Bonus. Amount of money added to the sum insured of a "with-profits" policy. It may be added during the term of the policy (reversionary) or when the policy matures (terminal), or both.
Bonus issue. Also known as a capitalisation or scrip issue. This is when a company issues free shares to a company's existing shareholders. No money changes hands and the share price falls pro rata. This is usually used as an exercise to make the shares more marketable (i.e. cheaper per share and therefore more attractive to small investors).
Bonus Sacrifice. A way of giving up the bonus element of income, and diverting the sum to additional pension contributions. Any notice of intention to sacrifice must be made clear before any bonus is announced. Tax treatment depends on specific circumstances and the local inspector.
Bridging Loan. A short-term loan taken out to help fund the purchase of one asset before the sale of another asset has been finalised. Commonly seen in the property market.
Broker. A broker is an agent who brings two parties together to do business, and is remunerated by a fee or commission calculated as a percentage of the contract sum.
Broker Fund. Generic term for an investment fund managed by a specialist financial adviser. Usually invested in the units of other investment funds/unit trusts.
Budget. A budget is a financial plan that details future expected income and expenditure. Also refers to a specific sum of money set aside for a particular project.
Buildings Insurance. A policy covering the structure of a house or other building against a number of different risks.
Building Society. A financial institution which, traditionally, accepts cash deposits and pays out interest on the cash so deposited at a variable rate. Money is also lent, traditionally to finance house purchase.
Building Societies Association. Trade association for UK building societies that represent societies in discussions with government and other organisations.
Building Societies Commission. The organisation which now controls the affairs of building societies, having taken over from the Registrar of Friendly Societies.
Building Societies Ombudsman. A service set up in 1987, and funded by all building societies, to investigate complaints made by customers against societies.
Bull Market. A rising investment market. It is the opposite of bear market.
Bulls. These are optimistic city dealers who believes prices will rise and therefore buy securities in the hope of selling them at a higher price than they paid.
Business Card. A convenient way of satisfying the compliance requirement of informing a potential client of who you are, who you work for, your business and regulatory status, and your regulatory authority.
Business Expansion Scheme (BES). Introduced in 1983 as a tax effective inducement to encourage investment in companies not quoted on the stock exchange. The scheme ended 31.12.93 and was replaced by the Enterprise Investment Scheme.
Business Interruption. See Consequential Loss.
Business Investor. Financial Services legislation recognises various types of investor requiring different levels of duty of care. The business investor is someone not involved full time with investments, but deals with them as part of his business role e.g. a finance director would be expected to have a higher level of knowledge than the 'man in the street'.
Business Property Relief. An Inheritance Tax relief, applying to lifetime transfers of business property or business interests.
Business Protection. Generally used to refer to such areas as share protection, key employee protection and partnership protection i.e. arranging by use of life assurance policies for money to be in the right hands in the event of death and retirement to help preserve a business and/or its status quo.
Business Rollover Relief. Where there is a capital gain on the sale of a company fixed asset, some or all of the gain may be offset by the purchase price of a replacement.
Buy and Sell Agreement. Both partnerships and director/shareholder controlled companies need agreements to help ensure a satisfactory disposal of shares in certain circumstances. The 'buy and sell' route is one such, where it is written into a wider agreement that in the event of death/retirement, one party will sell the business share, and another buy. A fixed agreement rather than an option.
Buyers Guide. Information given to a client by the Financial Adviser showing the advisor's status and obligations to the client.
Buy Out Policy. Refers to the type of stand-alone policy introduced by the 1981 Finance Act, which enabled those leaving an employment to transfer pension entitlement from a pension scheme to a personal contract.
