Jargon Buster

This jargon buster or glossary of words contains the definitions of some of the terms commonly used in financial services and related products.

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An event or occurrence which is unforeseen and unintended.

Accidental Damage/Sudden and Unforeseen Damage

Any kind of unexpected damage not excluded from the Insurance cover.

Account Information Service Provider (AISP)

A payment service provider which provides account information services.

Account Servicing Payment Service Provider (ASPSP)

A payment service provider providing and maintaining a payment account for the consumer (e.g. a bank)

Accrued Interest

Interest earned since last settlement (payment) date but not yet due or paid

Acquiring Bank

i) The provider of credit card merchant accounts. An acquiring bank handles funds from the time they are charged to the cardholder until they arrive at the merchant's bank (see also issuing bank). ii) In a merger, it is the bank that absorbs the bank acquired.


One company taking over the controlling interest in another company.

Act of God

An event outside of human control or activity. It's usually a natural disaster, such as a flood or an earthquake. Insurance policies usually specify which particular acts of God they cover, if any.


A professional person or organisation who uses statistical theory and probability to evaluate the risk involved in an insurance, and therefore the premiums payable by persons taking out insurance.

Additional Insured

An insured party specifically named with the main insured under an insurance policy.

Adjustable-Rate Mortgages (ARMS)

Also known as variable-rate mortgages. The initial interest rate is usually below that of conventional fixed-rate loans. The interest rate may change over the life of the loan as market conditions change. There is typically a maximum (or ceiling) and a minimum (or floor) defined in the loan agreement. If interest rates rise, so does the loan payment. If interest rates fall, the loan payment may as well. See also ARMs - Variable Rate Feature.


Term used to describe loans and overdrafts.


A written document in which the signer swears under oath before a notary public or advocate that the statements in the document are true.


An intermediary, bank or other financial organisation that regularly performs services for another in a place or market to which the other does not have direct access. Intermediaries may have agents in foreign countries or on exchanges of which they are not members. Sometimes also referred to as 'correspondent'.

Agent (insurance)

A company or person appointed by an insurance company as its representative and licensed by the MFSA. The agent solicits, negotiates or effects contracts of insurance, and provides service to the policyholder on behalf of the insurer.

All risks policy

Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy.


Any change involving an erasure or rewriting in the date, amount, or payee of a check or other negotiable instrument.

Alternative investment

An asset that is not one of the conventional investment types, such as stocks, bonds and cash. Most alternative investment are held by institutional investors because of their complex nature and limited regulations. Alternative investments include private equity, hedge funds, managed futures, real estate, commodities and derivatives contracts.


The process of gradually paying off a loan (reducing the amount that a customer owes) through periodic installment payments (of capital and interest) made according to a plan called the ‘amortisation schedule’.


Repaying a loan by making regular payments over a given period of time. See Amortisation.

Annual Percentage Rate (APR)

The cost of credit on a yearly basis, expressed as a percentage. See also APR.

Annual Percentage Yield (APY)

A percentage rate reflecting the total amount of interest earnt on a deposit account or a savings account over one year. It takes into account the interest rate and compounding period (usually a 365-day year).

Annual Report

The formal financial statement issued yearly by a public company. The report shows assets, liabilities, revenues, expenses and earnings. The report also shows the company’s financial condition at the close of the business year and other basic information of interest to shareholders. The annual report is also the most widely-read shareholder communication. A semi-annual report is issued by a company for the first six months of its financial year.


(i) A survey to determine the insurable value of a property, or the amount of a loss. (ii) The act of evaluating and setting the value of a specific piece of personal or real property.

Appropriateness Test

A test which needs to be carried out by the entity to assess the level of knowledge and experience of the customer or prospective customer when the product is determined to be complex.


The cost you have each year to borrow money, including any fees charged by the institution, expressed as a percentage.

Arbiter for Financial Services

The autonomous and independent body set up in terms of Act XVI of 2016 of the Laws of Malta with the power to mediate, investigate and adjudicate complaints filed by customers against financial services providers.


A way to resolve a dispute outside the courts. There are two types of arbitration: “voluntary” and “mandatory” (see voluntary arbitration and mandatory arbitration).

Arranged overdraft

The account provider and the consumer agree in advance that the consumer may borrow money when there is no money left in the account. The agreement determines a maximum amount that can be borrowed, and whether fees and interest will be charged to the consumer.

Ask/Bid Prices

A pair of prices, where “bid” is the price at which a trader is prepared to buy and “ask” is the price at which the trader is prepared to sell the security (note that “ask” is sometimes referred to as “offer”).


The various financial instruments and cash that an individual or organization owns.


The legal transfer by the holder of a life insurance policy (the assignor) of the benefits of the policy to a lender (the assignee), as a collateral (security) for a loan. In the event of the death of the assignor, the assignee is paid first and the balance (if any) is paid to the policy's beneficiary.


See Automated Teller Machine.

Auditor’s Report

Often called the accountant’s opinion. It is the statement of the accounting firm’s work and its opinion of the company’s financial statements, especially if they conform to the normal and generally accepted practices of accountancy.


A procedure which allows the institution to verify the identity of a payment service user or the validity of the use of a specific payment instrument, including the use of the user’s personalised security credentials.


The issuance of approval, by a credit card issuer, merchant, or other affiliate, to complete a credit card transaction.

Automated Teller Machine (ATM)

A 24/7 working machine that dispenses cash or performs other banking services when an account holder inserts a bank card and digits a PIN.

Available Balance

The balance of an account less any hold, uncollected funds, and restrictions against the account.

Available Credit

The difference between the credit limit assigned to a cardholder account and the present balance of the account.


"(i) A situation where the sum insured, on which the premium is based, is less than the full value of the insured property (also known as underinsurance). In such instances, the insured must bear a proportion of the loss in relation to the proportion of the sum insured to the full value. (ii) In Marine insurance, it is the physical loss or damage caused by a marine peril."