Glossary
The compliance glossary
Plain-English definitions of the terms UK advice firms meet every day — from the Consumer Duty and vulnerable customers to equity release, call QA and AI.
11 terms
The Consumer Duty
- Consumer Duty
- The FCA's rules requiring firms to act to deliver good outcomes for retail customers, set out in Principle 12 and PRIN 2A. It came into force on 31 July 2023 for products and services open to sale or renewal, and on 31 July 2024 for closed products and services.A practical guide to the Consumer Duty
- Principle 12
- The consumer principle at the heart of the Duty: "A firm must act to deliver good outcomes for retail customers." Where it applies, it replaces Principles 6 and 7.
- PRIN 2A
- The chapter of the FCA Handbook's Principles for Businesses sourcebook that contains the Consumer Duty's detailed rules — the cross-cutting rules, the four outcomes, and requirements on governance and monitoring.
- PS22/9
- The FCA policy statement, published in July 2022, that introduced the Consumer Duty and its rules.
- FG22/5
- The FCA's final guidance on the Consumer Duty, published alongside PS22/9, explaining how the FCA expects firms to meet the rules.
- Cross-cutting rules
- Three rules that apply to all of a firm's conduct under the Duty: act in good faith towards retail customers, avoid causing them foreseeable harm, and enable and support them to pursue their financial objectives.
- The four outcomes
- The Duty's outcome areas: products and services (PRIN 2A.3), price and value (PRIN 2A.4), consumer understanding (PRIN 2A.5) and consumer support (PRIN 2A.6).How COSA evidences each outcome
- Fair value assessment
- Under the price and value outcome, an assessment of whether the price a customer pays for a product or service is reasonable compared with the benefits they can expect.
- Sludge
- Unnecessary friction that makes it harder for customers to act in their own interests — such as complicated processes to complain, switch or cancel. The consumer support outcome expects firms to avoid unreasonable barriers.
- Consumer Duty board report
- The assessment a firm's governing body must review and approve at least annually, setting out whether the firm is delivering good outcomes for its customers and what action it will take where it isn't.What to include from your client calls
- Consumer Duty champion
- The board-level member firms were expected to appoint to help make sure the Duty is raised regularly in the board's discussions, alongside the chair and CEO.
4 terms
Vulnerable customers
- Vulnerable customer
- In the FCA's words, someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. Vulnerability can be temporary, sporadic or permanent.Identifying vulnerable customers on calls
- FG21/1
- The FCA's guidance for firms on the fair treatment of vulnerable customers, published in February 2021.
- Drivers of vulnerability
- The four areas FG21/1 uses to group the causes of vulnerability: health, life events, resilience and capability. A customer can be affected by more than one.
- Teach-back
- Asking a customer to explain a key point in their own words, to check they have understood it. Stronger evidence of understanding than asking whether something "makes sense".
5 terms
Governance and accountability
- SM&CR
- The Senior Managers and Certification Regime, which makes individuals accountable for the areas they are responsible for. It has applied to FCA solo-regulated firms since 9 December 2019.
- Duty of responsibility
- Under SM&CR, a senior manager's obligation to take reasonable steps to prevent regulatory breaches in their area of responsibility.
- Management information (MI)
- The data a firm's managers and board use to oversee the business. Under the Duty, good MI shows the outcomes customers receive, not just the activity the firm carried out.Compliance MI your board will read
- Audit trail
- A record of who did what, and when — for example logins, uploads, exports and changes to results — that lets a firm show how a decision was reached.
- DISP
- The Dispute Resolution: Complaints sourcebook in the FCA Handbook, which sets out how firms must handle complaints.
9 terms
Equity release
- Lifetime mortgage
- The most common form of equity release: a loan secured on the home, where interest is usually added to the loan and the balance is repaid, typically from the sale of the home, when the last borrower dies or moves into long-term care.Equity release call compliance
- Home reversion
- A form of equity release in which part or all of a home is sold to a provider in return for a lump sum or regular payments, with the right to go on living there.
- Interest roll-up
- Interest that is added to the loan rather than paid each month, so interest is then charged on the interest and the balance grows over time.
- No negative equity guarantee
- A protection in plans that meet the Equity Release Council's standards: the borrower will never owe more than the value of their home, so no debt is passed on to their estate.
- Early repayment charge (ERC)
- A charge for repaying a loan, or more than an agreed amount of it, earlier than the terms allow.
- Key Facts Illustration (KFI)
- The illustration an equity release customer receives setting out a plan's key features, its costs and how the amount owed could grow.
- Equity Release Council
- The trade body for the UK equity release sector. Its members follow the Council's rules and product standards.
- Independent legal advice
- Advice from the customer's own solicitor, which plans meeting the Equity Release Council's standards require before completion.
- MCOB
- The FCA's Mortgages and Home Finance: Conduct of Business sourcebook. MCOB 8 sets the advising and selling standards for equity release.
9 terms
Call QA and monitoring
- Call QA
- Quality assurance of recorded calls: checking conversations against a firm's standards and regulatory requirements, and acting on what is found.How many calls should you review?
- Call sampling
- Reviewing a subset of calls — chosen at random or by risk — and using the results to draw conclusions about all of them. Good at estimating common issues; poor at catching rare ones.
- 100% call monitoring
- Assessing every in-scope call rather than a sample, usually with an automated first pass and human review of the calls that are flagged.
- Call-selection policy
- The settings that decide which calls are assessed — for example call direction, call types, minimum and maximum length, and whether calls were answered. In COSA, every excluded call is logged with its reason.
- Verbatim rule
- A compliance rule that checks specific words were said, such as a recording notice or a scripted risk warning.Writing rules an AI can check
- Non-verbatim rule
- A compliance rule that checks a topic was covered, however the adviser phrased it — for example, that interest roll-up was explained.
- Override
- An authorised reviewer changing an automated result. In COSA the original verdict is kept for audit, and automatic re-runs never replace a reviewer's decision.
- Triage
- In COSA, the queue of calls whose type couldn't be classified with confidence — for example fact find or follow-up — held for a person to confirm so the right rules run.
- Speaker diarisation
- Separating a recording by speaker, so a transcript shows who said what.
5 terms
AI and data
- Retrieval-augmented generation (RAG)
- An approach in which an AI system first retrieves the passages most relevant to a question from a set of documents — such as a client's call transcripts — and then answers from those passages, which lets it cite its sources.How cited AI answers work
- Citation
- A link from part of an AI answer to the passage it came from. In the COSA Assistant, each citation shows the call, the time range and how closely the passage matched, and can play the recording from that moment.The COSA Assistant
- Confidence score
- An indication of how certain an automated assessment is about a result, so reviewers can prioritise what to check.
- Data protection impact assessment (DPIA)
- An assessment UK GDPR requires before processing that is likely to result in a high risk to individuals — which often includes large-scale processing of call recordings with AI.
- Special category data
- Personal data UK GDPR treats as more sensitive — including health information — which needs an additional condition for processing. Calls often contain it.
Definitions are general information, not legal or regulatory advice. For your firm's obligations, refer to the FCA Handbook and the FCA's guidance.
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