It is the ability to fully and promptly fulfil one’s financial commitments through adequate economic resources.

Edited by: Bank of Italy

Insurance that protects the insured from the economic consequences that derive from an accident suffered by him/her, i.e., from an event due to fortuitous, violent and external causes that cause the insured objectively ascertainable physical injuries.

Edited by: IVASS

The acronym ADR (Alternative Dispute Resolution) refers to alternative dispute resolution procedures between consumers and professionals/companies, which have the advantage of offering a quick, simple and out-of-court solution.

In Italy, the regulation of ADR procedures is Italian Legislative Decree no. 130 of 6 August 2015 which, in transposing the provisions of Directive (2013/11/EU (Directive on ADR for consumers), introduced into the Consumer Code Title II-bis - Out-of-court dispute resolution.

In implementation of this directive, several competent Authorities have been identified in the relevant sectors of operation, listed in Article 141-octies of the Consumer Code. Each competent Authority shall establish the list of ADR entities within its competence, taking care of the related updates and supervising the registered entities. The Ministry of Enterprises and Made in Italy, in addition to being one of the competent Authorities, also plays the role of point of contact with the European Commission and of connection and coordination of the various Authorities.

Edited by: MIMIT

See also the term: Banking and Financial Ombudsman

See also the term: Financial Dispute Arbitrator

It involves the provision of personalised recommendations to a customer, at his/her request or at the initiative of the investment firm, regarding one or more transactions relating to financial instruments. It is one of the investment services/activities regulated by Directive 2014/65/EU - the so-called MiFID2 (Market in Financial Instruments Directive).

Edited by: CONSOB

These are all those funds that differ from traditional investments (e.g., shares, bonds, liquidity) based on complexity, liquidity, applicable discipline and fund management methods. By their nature, they are therefore primarily intended for professional investors. There are different types, such as hedge funds (funds that use particular hedging strategies, without constraints regarding the object of the investment), private equity funds (funds that invest in small and medium-sized enterprises with the aim of supporting their development especially during important periods of their life cycle) and venture capital funds (funds that invest in small and medium-sized enterprises with high development potential).

Edited by: CONSOB

The Annual Nominal Rate indicates the interest rate (i.e., the price), in percentage and on an annual basis, requested by a creditor on the disbursement of a loan. Unlike the APRC, it does not express the “overall cost” of the loan, which can also be much higher (for example, for expenses, charges and ancillary commissions). Therefore, a loan with an Annual Nominal Rate of zero could have an APRC greater than zero.

Edited by: Bank of Italy

In supplementary pensions, the annuity is the amount of money that the member, now retired, will receive periodically. In more technical terms, the annuity is the pension benefit that the pension fund undertakes to pay periodically to the pensioner. It is calculated by applying a transformation coefficient to the contribution amount to take into account the life expectancy of the enrolled person.

Edited by: COVIP

See also the term: Transformation coefficient

See also the term: Life expectancy

The AOER is an interest rate and an average cost indicator applied that indicates the average value of the rate actually applied by the banking and financial system to homogeneous categories of credit transactions (e.g., personal loans or mortgages) in the second quarter of the previous year. In accordance with the law, the AOER takes into account commissions, remuneration of any kind and expenses, excluding those for taxes and duties, related to the provision of credit. The rates recorded are published quarterly in the Official Gazette and are the reference parameter for determining the usury threshold.

Edited by: Bank of Italy

For all investment services (except investment advice and portfolio management, where the intermediary must assess the suitability) the intermediary must assess that the investment proposed or requested by the customer is appropriate. To assess the appropriateness, the intermediary must ask the customer for information concerning, exclusively, his/her knowledge and experience about the type of instrument or service proposed or requested. More specifically, he/she must ask the customer about the types of financial services, operations and instruments with which he/she is familiar, the nature, size and frequency of financial transactions carried out in the past, the level of education and the profession carried out. Appropriateness aims at verifying whether the customer has sufficient knowledge and experience for understanding the risks associated with the specific investment. Contrary to what happens in the case of the suitability assessment, in the event of a failure to assess appropriateness, the intermediary informs the customer, but is not required to refrain from the service if the customer requests that the transaction deemed inappropriate be carried out anyway.

Edited by: CONSOB

See also the term: Suitability

The APRC (Annual Percentage Rate of Charge) indicates the total cost of the loan, expressed as an annual percentage of the credit granted. It includes interest and all other expenses, so it is particularly useful for comparing the overall cost of the offers of the different operators and deciding which financing is best suited to one’s economic possibilities. It must always be indicated in advertising messages, in the offer documentation and in the contract. It is calculated according to the methods established by law and defined by specific instructions of Bank of Italy.

Edited by: Bank of Italy

It is an operation that consists of buying a good or financial asset on one market and selling it on another market, taking advantage of price differences in order to make a profit.

Edited by: CONSOB

Automatic equipment that allows customers to carry out operations such as withdrawing cash, depositing cash or cheques, requesting account information, bank transfers, paying utilities, recharging telephones, etc.. The customer activates the terminal by inserting a card and entering the personal identification code.

Edited by: Bank of Italy

So-called robo-advice, is the provision of advice related to investments or portfolio management services (full or partial) through an automated or semi-automated system used as a customer-facing tool.

Edited by: CONSOB

A bank cheque is a cash substitute payment instrument with which the holder of the current account (drawer) orders his/her bank (drawee) to pay a certain amount of money to another person (beneficiary).

To learn more: https://economiapertutti.bancaditalia.it/pagare/assegno/

Edited by: Bank of Italy

The bank current account is a product for the collection of savings that at the same time simplifies money management thanks to the services offered by the bank to make payments (debit operations) and to collect payments (credit operations). The difference between the total amount of credits and that of debits made up to a certain date is expressed in a summarised way by the current account balance. Depending on the sign of the difference, the balance is called credit (positive), otherwise it is debit (negative). Anything new recorded on the account determines an update of the account.

To learn more: https://economiapertutti.bancaditalia.it/pagare/conto-corrente/

Edited by: Bank of Italy

The Banking and Financial Ombudsman (ABF) is an out-of-court alternative dispute resolution (ADR) scheme for disputes between customers and banks and other financial intermediaries, concerning banking and financial transactions and services. It is an independent and impartial body in its tasks and decisions, supported in its operation by Bank of Italy, which through technical secretariats assists its operation. It is an alternative to ordinary justice, compared to which it offers simpler, faster and more economical protection.

Edited by: Bank of Italy

Bank of Italy is the central bank of the Italian Republic; it is an institution of public law, regulated by national and European regulations. It is an integral part of the Eurosystem, which is composed of the national central banks of the euro area and the European Central Bank. It pursues objectives of general interest in the monetary and financial field: the maintenance of price stability; the stability and efficiency of the financial system and the other tasks entrusted to it by national legislation. In Europe, Bank of Italy is the competent national authority under the Single Supervisory Mechanism (SSM) for banks and is the national resolution authority under the Single Resolution Mechanism (SRM) for banks and stock brokerage firms. The Bank is also entrusted with important responsibilities in the field of customer protection of banking and financial intermediaries that complement the other supervisory purposes; in this context, it develops and promotes financial education. The Bank’s functional and governance structure reflects the need to strictly protect its independence from external influences, an essential prerequisite for effectively carrying out the institutional action. The Institute is accountable to the Government, Parliament and citizens through the dissemination of data and news on the institutional activity and the use of resources.

Edited by: Bank of Italy

The savings account is also called a deposit account. It differs from the current account because it is a real savings instrument and does not allow operations other than the deposit or withdrawal of sums. The savings account is associated with a passbook, which is the document onto which all withdrawal and deposit operations are recorded. The passbook can be nominative (if only the holder can withdraw money from the deposit) or bearer (if anyone in possession of it can withdraw). In a savings account, the bank acquires ownership of the sums deposited by the customer, undertaking to return them at the end of the agreed term (time deposits), or at the request of the customer (free deposits); in exchange for this availability, banks remunerate customers with an interest rate.

To learn more: https://economiapertutti.bancaditalia.it/risparmiare/deposito-a-risparmio/index.html

Edited by: Bank of Italy

It is the order given by the debtor to transfer a sum to a creditor’s account, usually debited from his/her current account. The transfer therefore assumes the existence of a destination account. The person who receives the sum is called the beneficiary and the sender is called the payer. The payer and the beneficiary of a transfer transaction may be the same. When the transfer takes place between accounts opened at the same bank, it can be called a fund transfer.

To learn more: https://economiapertutti.bancaditalia.it/pagare/bonifico-sepa/

Edited by: Bank of Italy

It is understood as a reference parameter for objectively comparing the results, trends of financial instruments, the strategies of managers or simply the market trend, obtained by using financial indicators developed by third parties and commonly used, e.g., stock indices.

Edited by: CONSOB

Person designated by the policyholder of a life insurance policy to receive the sums insured upon the occurrence of the event provided for in the contract. The designation may be made in the contract itself or by subsequent written declaration to the insurance undertaking or by will.

Edited by: IVASS

Computerised archive set up at Bank of Italy to ensure the smooth functioning of payments. The following subjects are registered:

• those who have issued bank and postal cheques without being authorised or without having the necessary funds to meet the payment
• those who have had their authorisation to use credit and debit cards revoked due to non-payment of the sums relating to the transactions carried out.

In the case of cheques, registration in the CAI determines the application of the “system revocation”, i.e., the prohibition of issuing cheques and stipulating new cheque agreements with the banking and postal system for six months.

In the case of payment cards, registration results in the revocation of the authorisation to use credit and debit cards for two years, but is for information purposes only. This means that each issuer can independently decide whether or not to issue a card to a person registered in the CAI.

Edited by: Bank of Italy.

In supplementary pensions, the annuity is the amount of money that the member, now retired, will receive periodically. In more technical terms, the annuity is the pension benefit that the pension fund undertakes to pay periodically to the pensioner. It is calculated by applying a transformation coefficient to the contribution amount to take into account the life expectancy of the enrolled person.

Edited by: COVIP

See also the term: Transformation coefficient

See also the term: Life expectancy

Contract - included in the Insurance Investment Products (IBIP) with which the insurance undertaking undertakes to pay, after a certain number of years (not less than five), a sum of money revalued annually and therefore, its amount is determined against the payment of a single premium or periodic premiums by the policyholder. The capital redemption contract differs from life insurance in that the insurer’s benefit does not depend on the occurrence of events relating to the life of the insured.

Edited by: IVASS

See also the term: Investment insurance products - IBIP

Cash refers to coins and banknotes. By paying with coins and banknotes, the buyer is freed from the obligation to pay the seller the price of the goods or services purchased. This characteristic is called “liberating power” and is attributed by law. For this reason it is called “legal tender” and no one can refuse it in payment.

To learn more: https://economiapertutti.bancaditalia.it/pagare/contante/index.html

Edited by: Bank of Italy

Government debt securities, issued by the Italian State typically with a duration of 7 years from issue, characterised by a variable interest coupon, which is determined starting from the 6-month Euribor rate to which a fixed percentage (spread) is added. The repayment of the principal is made in a single instalment at maturity and is equal to the nominal value (100).

Edited by: CONSOB

Information system managed by Bank of Italy in which all loans over EUR 30,000 are recorded. If the debtor, due to serious defaults, is classified as “non-performing”, he/she is also registered for lower amounts. The information of the Central Credit Register (Centrale dei rischi, CR) is available to all intermediaries. The customer can also find out his/her registered position free of charge: to do so, he/she can contact the Branches of Bank of Italy. The CR is used by customers who have a good “credit history” to obtain financing more easily and on better terms. It is used by banks and financial companies to assess the ability of customers to repay the loans granted. The data of the Central Credit Register are confidential.

To learn more: https://www.bancaditalia.it/pubblicazioni/guide-bi/guida-centrale/index.html

Edited by: Bank of Italy

The Contract for Difference is a derivative financial instrument whose price derives from the value of other investment instruments (it is gained or lost depending on the difference between the purchase price and the sale price of the underlying asset).

Edited by: CONSOB

The quick investigation commission is a cost charged to the customer. It is a sum determined in a fixed amount, expressed in absolute value and commensurate with costs, charged to the customer when he/she carries out unauthorised transactions that result in an overrunning, i.e., the use of sums not granted or that exceed the credit line granted, in current account and credit opening contracts or increase the amount of an already existing overrunning.

Edited by: Bank of Italy

A harmful event that corresponds to the insured risk and that gives rise to the right (for the insured, the injured party or the beneficiary) to receive the benefit due from the insurance undertaking.

Edited by: IVASS

The National Council of Consumers and Users (CNCU) is an advisory body established at the Ministry of Enterprises and Made in Italy, appointed by Decree of the President of the Council of Ministers, and chaired by the Minister himself or by his delegate.

It is composed of representative consumer associations at national level according to the criteria established by Art. 137 of the Consumer Code and a representative designated by the Unified Conference (so-called State- Regions-cities and local autonomies). The CNCU can express opinions on draft legislative acts, formulate reports and proposals on issues related to consumer rights and policies, promote the connection between national and regional consumer policies and promote studies, research and other initiatives on consumption and consumer rights problems.

Edited by: MIMIT

Systematic errors. Classical financial theory assumes that individuals are perfectly rational and act using all the information available. The facts, however, show that people, especially investors, make systematic errors in the perception and processing of information. These errors are reflected in “cognitive and behavioural abnormalities” (distortions or biases) that can lead to suboptimal and inadequate financial choices.

By way of example, the most common biases often cited include: excessive confidence, which leads to the belief that one has more knowledge and information than one actually possesses, and the imitation of other people’s behaviour (herding behaviour), which occurs both in speculative bubbles, when irrational optimism pushes purchases and inflates market values, and in periods of high turbulence, when the overreaction of investors results in the phenomenon known as panic selling, i.e., massive selling that triggers a downward price spiral.

Edited by: CONSOB

See also the term: Overconfidence

See also the term: Speculative bubble

The collateral are used to protect the lender if the customer fails to repay the loan. Many contractual relationships with banks can be accompanied by the issuance of guarantees that are defined as active when the bank receives them and passive when the bank issues them in favour of customers. Active collateral are divided into real and personal collateral. Real collateral - the pledge and the mortgage - are rights over things. The pledge concerns movable property (such as a jewel). A mortgage covers real estate (such as houses) or registered movable property (such as boats or cars). If the customer fails to repay the loan, the lender can retaliate by having the asset sold as collateral. Personal guarantees are linked to the assets of the person who provides them; the most common is the surety.

Edited by: Bank of Italy

In policies that cover Civil Liability, the sum paid by the insurance undertaking to compensate the injured third party for the damage suffered in the event of an accident.

To learn more: https://economiapertutti.bancaditalia.it/pagare/carta-prepagata/index.html

Edited by: IVASS

See also the term: Indemnity

Compound interest is the calculation of interest on interest that has already accrued on a sum due. The accrued interest is transformed into capital (in technical jargon it is said that it is “capitalised”) i.e., it is added to the amount due and in turn produces interest: it is in this case that we speak of compound interest. Any form of production of interest on the interest owed by the customer to the bank is prohibited for any banking transaction.

To learn more: https://economiapertutti.bancaditalia.it/informazioni-di-base/anatocismo/index.html

Edited by: BANK OF ITALY

The compound interest rate, formally known as the compound capitalisation regime, is a calculation methodology that allows one to establish how the value of a certain capital evolves over time, in which the earnings accrued periodically are automatically reinvested.

If rates are positive, the reinvestment of the earnings accrued produces an exponential growth of capital: the multiplier effects become more and more pronounced as time and, of course, the interest rate increases.

Sourch: https://economiapertutti.bancaditalia.it/notizie/la-magia-dell-interesse-composto/

Edited by: Bank of Italy

It is the pension paid by INPS and by the professional Funds.

Edited by: COVIP

They are cooperative or consortium entities that issue collective guarantees against loans disbursed in favour of member or consortium companies to facilitate access to credit or finance specific projects. In the banks’ activity of granting credit to small and medium-sized enterprises, the intervention of consortia makes it possible to reduce the costs incurred to find information on the parties to be entrusted and the risks for cases of default.

Edited by: Bank of Italy

It is the supervisory authority that oversees the transparency and correctness of behaviour in the Italian financial markets. The objectives of its activity are to safeguard confidence in the financial system, to protect investors, and to ensure the proper functioning and competitiveness of the financial system. To this end: it regulates the provision of investment services and activities by intermediaries, the disclosure obligations of companies listed on regulated markets and the operations of appeal to public savings; it supervises the market management companies and the transparency and orderly conduct of trading as well as the transparency and correctness of the conduct of intermediaries and financial advisers authorised to offer off-site; it sanctions supervised entities; it monitors the information provided to the market by the parties who appeal for public savings as well as the information contained in the accounting documents of listed companies; it ascertains any anomalous trends in trading on listed securities and carries out any other act of verification of violations of the rules on insider trading and market manipulation; it collaborates with other national and international authorities responsible for the organisation and functioning of financial markets; it communicates with operators and the public of investors for a more effective performance of its tasks and for the development of the financial culture of savers.

Edited by: CONSOB

Human life insurance or capital redemption contract - included in the Insurance Investment Products (IBIP) - in which the insurance benefit is revalued annually according to the return achieved by a separate management in which the contract premiums flow.

Edited by: Ivass

See also the term: Investment insurance products - IBIP

See also the term: Separate management

It is a method of calculating the pension that is based on the contributions paid over the entire working life, revalued annually with a capitalisation coefficient, and on the age at retirement.

Edited by: COVIP

It is the deposit guarantee scheme of cooperative banks. The purpose of the Fund is to protect the depositors of the Banks associated with it. Banks belonging to the Italian Cooperative Credit System are members of the Fund and branches of EU and non-EU banks can also join it, provided that they are inspired by the principles of credit cooperation. The Fund provides similar protection to that offered by the Interbank Deposit Protection Fund and is subject to the supervision of Bank of Italy.

Edited by: Bank of Italy

Interactive tool having the aim of facilitating the comparison of costs between the different pension forms. The cost comparator is published on the COVIP website.

Edited by: COVIP

It is an electronic payment instrument that enables the holder, on the basis of a contractual relationship with the issuer, to make purchases of goods or services at any establishment belonging to the international reference circuit or cash withdrawals (through automatic teller machines - ATMs). The amounts spent are paid by the cardholder on a predefined basis, usually monthly, in a single solution or, if provided for by the agreement, in instalments (so-called revolving credit cards).

To learn more: https://economiapertutti.bancaditalia.it/pagare/carta-di-credito/

Edited by: Bank of Italy

It is the sum that the bank, at the customer’s request, undertakes to make available to him/her over and above the available balance. The contract may provide for the payment of interest on the sums used and an all-inclusive commission.

Edited by: Bank of Italy

Position assigned to each insured person based on driving conduct over the years, as part of the bonus-malus system of compulsory motor liability coverage. The credit quality is internal when it is assigned by the individual insurance undertaking: the number of positions varies from one undertaking to another and their comparability is guaranteed by the Universal Conversion class (Conversione Universale, CU) defined by IVASS on the basis of Regulation no. 9 of 19 May 2015. The CU therefore makes it possible to convert the various “internal credit qualities” into a unique system, consisting of 18 steps.

Edited by: IVASS

It represents the risk that a debtor will not be able to meet his/her obligations. In the case of a bond, it is the risk that the issuer will not pay the coupons and/or repay the principal at maturity because it is in great difficulty or because it has gone bankrupt. Very frequent indicators of credit risk are:

• the expected probability of bankruptcy of the issuer (so-called default);
• the rating agencies’ assessment, typically expressed briefly with letters (so-called rating).

If the expected probability of default rises, the credit risk rises.

If the rating falls, the credit risk rises.

Edited by: Bank of Italy - CONSOB

Creditworthiness is the customer’s ability to repay the amount borrowed on the deadlines set by the loan agreement. It is assessed by the lender before granting the loan, on the basis of sufficient, proportionate and appropriately verified information on the economic and financial situation of the customer. This information can be provided by the customer himself/herself or retrieved through the query of databases such as the Central Credit Register (CR) managed by Banca d’Italia or the Credit Information Systems (SIC) managed by private entities; in this case, however, the customer must be informed in advance. It is an important parameter that measures the ability to repay and becomes essential in the bank-customer relationship to create the necessary trust between the parties so that an economic relationship can be established. Creditworthiness is an essential parameter, not only to be able to obtain a loan, but also to define the conditions: in the face of a greater risk of insolvency, in fact, the lender could ask for a higher interest rate to cover the risks associated with the granting of credit.

Edited by: Bank of Italy

They are instruments issued by a financial intermediary and traded on regulated markets that follow the operation of options, giving the buyer the right, but not the obligation, to buy (covered warrant call) or sell (covered warrant put) an underlying asset at a predetermined price (strike price) at (or within) a predetermined maturity.

Edited by: CONSOB

COVIP, the Pension Funds Supervisory Commission, is the independent administrative authority that has the task of supervising the correct functioning of the supplementary pension system, to protect those enrolled and their pension savings.

Edited by: COVIP

Credit scoring is an automated evaluation system adopted by banks and financial intermediaries to analyse customer financing requests. It is based on automated systems that provide for the application of statistical methods or models to assess credit risk, and the results of which are expressed in the form of summarised judgements, numerical indicators or scores, associated with the data subject, intended to provide a synthetic representation, in predictive or probabilistic terms, of his/her risk profile, reliability or punctuality in payments.

Edited by: Bank of Italy - CONSOB

Digital representations of value, used as a medium of exchange or held for investment purposes, which can be transferred, traded or stored electronically. Crypto-assets have no countervalue in the real economy, unless these currencies are accepted as a medium of exchange. Alongside crypto-assets whose value is unrelated to any reference good or asset (called first-generation crypto-assets) – such as Bitcoin – others have arisen (called second-generation crypto-assets) whose value is linked to that of specific “underlying” goods or assets and tends to be more stable.

To learn more: https://economiapertutti.bancaditalia.it/investire/cripto-attivita/

Edited by: Bank of Italy

See also the term: Bitcoin

Government debt securities, issued by the Italian State with a maturity of 24 months from issue, without interest coupons (zero coupon), whose remuneration consists entirely of the difference between the redemption price and the purchase price

Edited by: CONSOB

Card that allows the holder, on the basis of a contract with his/her bank, to purchase (via POS) goods and services at any commercial establishment belonging to the circuit to which the card is enabled or to withdraw cash (via ATM) with immediate debit from the current account linked to the card. In Italy, the most widespread is commonly called by the name of the Bancomat circuit.

To learn more: https://economiapertutti.bancaditalia.it/pagare/carta-di-debito/

Edited by: Bank of Italy

Tax relief recognised by the State which consists in the possibility of subtracting from one’s total income the amount of some expenses made, within certain limits, thus reducing IRPEF (personal income tax). Contributions paid to supplementary pension schemes are deductible up to the limit of EUR 5,164.57 per year. The benefit is also valid if these contributions are paid in favour of one’s children or dependent family members.

Edited by: COVIP

Contractual clause according to which the policyholder undertakes to bear part of the cost of the claim. The deductible can be: absolute, and in this case its amount is always deducted from the amount of compensation regardless of the extent of the damage; relative when it represents the threshold up to which the company is not required to perform any service. Once the threshold of the relative deductible is exceeded, the indemnity is paid in full and without deductions.

Edited by: IVASS

See also the term: Contract with benefits that can be revalued

Pension funds for which the amount of the supplementary pension depends on the contributions paid and the results of the fund’s financial management.

Edited by: COVIP

Pension funds for which the amount of the supplementary pension is established at the time of accession, as a rule, with reference to that of the compulsory pension. To ensure the payment of the pension to the established extent, the amount of contributions to be paid to the pension fund during the working period is not fixed, but may vary over time.

Edited by: COVIP

Derivative financial instruments are contracts whose value depends on the performance of an underlying asset. The underlying assets can be financial (e.g., equities, interest and exchange rates, indices) or real (e.g., commodities such as coffee, cocoa, gold, oil, etc.).

Edited by: CONSOB

A direct debit is a payment transaction by which the beneficiary, previously authorised by the payer, requests that a sum be debited from the payer’s account. It is a payment service useful for paying automatically, once or on a regular basis, companies or individuals who provide goods or services (e.g., electricity bills, gas bills, or even loan instalments). If it is recurring, it is called bank domiciliation. The customer must authorise the company providing the service, signing a payment mandate.

To learn more: https://economiapertutti.bancaditalia.it/pagare/addebito-diretto/

Edited by: Bank of Italy

Money stored electronically on prepaid cards or e-money accounts, with which payment transactions can be carried out. Banks, Poste Italiane and electronic money institutions (EMIs) can issue electronic money.

Edited by: Bank of Italy

(integrated insurance or built-in insurance) Insurance policies that can be purchased in combination with the products to be insured, thus making a single transaction.

Edited by: IVASS

Insurance that guarantees a lump sum or annuity if, at a predetermined maturity, the insured is alive. The life insurance policy has a variable duration and can be of three types:

• “deferred capital”: at the end of the contract, the insurance undertaking provides the beneficiary with the benefit provided for in the contract itself (e.g., invested capital, revalued interest);
• “deferred annuity”: the beneficiary receives an annuity with periodic, monthly or annual maturities, starting from a contractually established date;
• “immediate annuity”: the premium is paid in a single instalment and the annuity begins to be received by the beneficiary on the first payment date of the annuity immediately following the payment.

Edited by: IVASS

ETCs are financial instruments traded on regulated markets, belonging to the broader family of Exchange Traded Products (ETPs), which offer the possibility of easily investing in individual commodities and precious metals.

Edited by: CONSOB

ETFs are investment funds that are traded on regulated markets, belonging to the broader family of Exchange Traded Products (ETPs), which replicate the performance of the underlying index (e.g., the FTSE MIB).

Edited by: CONSOB

ETNs are financial instruments (similar to bonds without a coupon with a very long maturity) traded on regulated markets, belonging to the broader family of Exchange Traded Products (ETPs), issued against the issuer’s direct investment in the underlying assets (other than commodities) or in derivative contracts on the same.

Edited by: CONSOB

ETPs are a family of financial products traded on regulated markets whose primary objective is to replicate the performance of a benchmark index or a particular underlying asset. The best known forms are ETFs (Exchange Traded Funds), ETCs (Exchange Traded Commodities) and ETNs (Exchange Traded Notes).

Edited by: CONSOB

Euribor (or Euro Inter Bank Offered Rate) indicates the average interest rate of financial transactions in euros among the main European banks. It is an interbank rate defined daily at the European level, which can be used as a benchmark for variable-rate mortgages.

Edited by: Bank of Italy

Document containing personalised information on the mortgage, necessary for comparing the different credit offers on the market. The European Standardised Prospectus is delivered free of charge and promptly after the consumer has provided the intermediary with information about his/her needs, financial situation and preferences, and in any case in good time before the consumer is bound by a credit agreement or an offer. The contents of the contract must be consistent with the information contained in the European Standardised Prospectus.

To learn more: https://economiapertutti.bancaditalia.it/notizie/il-secci-e-il-pies-due-strane-sigle-che-ci-tutelano-quando-chiediamo-un-prestito/

Edited by: Bank of Italy

The Eurosystem is the system of central banks in the euro area responsible for implementing the single monetary policy and comprises the European Central Bank (ECB) and the national central banks (NCBs) of the European Union Countries that have adopted the euro.

Edited by: Bank of Italy

The finalised loan, or “linked credit”, is a financing of a sum, usually between EUR 200 and 75,000, to be repaid in instalments, linked to the purchase of a certain good or service, for example a car. It is also possible to obtain it directly from the seller of the good/service who has an agreement with one or more banks or financial companies and usually manages the file on their behalf. For consumers who access this type of loan, the law provides for special protections and rights compared to other types of loans. All forms of credit for needs concerning professional activities, such as the purchase of an agricultural machine or a printer for the shop, are excluded from consumer credit.

Edited by: Bank of Italy

The Financial Disputes Arbitrator (ACF), active at Consob, is a dispute resolution tool between investors and intermediaries for the violation of the obligations of diligence, correctness, information and transparency that intermediaries (e.g., banks and financial advisers) must comply with when providing investment services or collective asset management services. Savers can appeal to the ACF, at no cost and do not need to be assisted by attorneys, for claims for damages not exceeding EUR 500,000.

To learn more: https://www.acf.consob.it/

Edited by: CONSOB

Financing is defined as the assignment of a sum against the commitment to subsequently repay the same sum (free loan) or a larger sum.

Edited by: Bank of Italy

Financial investment is the portion of monetary savings that is used to purchase financial instruments and products that allow one to maintain or increase one’s wealth over time for future use. The definition of investment also includes the subscription of supplementary pension contracts or the subscription of insurance investment products with a financial content. Investing requires familiarity with some basic concepts - such as inflation (i.e., the “generalised” increase in the price level), the risk-return relationship (a relationship according to which as the risk or uncertainty linked to the future value of a financial instrument increases, the return linked to it also increases), the compound interest rate (if a sum of money is used for several periods, interest is calculated at the end of each of them and is also calculated on the interest accrued in the previous period which is added to the capital) or, at least, awareness of the importance of understanding one’s financial needs and relying on professionals and authorised entities.

There are different types of financial instruments that can be purchased on the financial markets (e.g., shares, bonds, mutual funds, insurance investment products) and investment services offered by authorised intermediaries that can meet the investment objectives of the individual investor, as well as his/her return expectations and risk appetite.

Edited by: CONSOB

The term derives from the union of two terms, financial and technology, and indicates technological innovation applied to the financial and banking field. We talk about FinTech with regard to the offer of payment, financing or investment services that are characterised by high technological profiles. By way of example, FinTech is referred to as: credit provision (peer-to-peer lending and crowdfunding); crypto-assets; decentralised transaction validation technologies (distributed ledger technology - DLT and blockchain; automated investment advice services (or robo advice).

Edited by: CONSOB

See also the term: Crypto-assets

See also the term: Blockchain

See also the term: Automated investment advice

Insurance with which the insurance undertaking undertakes to protect the insured’s assets from claims for damages, in the event of accidents unintentionally caused to third parties for which the insured is civilly liable. The risk covered consists of two elements: the occurrence of a negligent act (e.g., due to negligence or imprudence) which, by causing damage to third parties, gives rise to the obligation to compensate, and the claim for compensation made by the injured party to the insured. Damage caused intentionally, i.e., voluntarily, cannot under any circumstances be insured.

Edited by: IVASS

These are bonds issued with the aim of using the funds raised to finance expenses that contribute to the achievement of environmental protection objectives, including the reduction of polluting emissions. From a financial point of view, they do not have specific characteristics that in principle differentiate them from other securities placed by the same issuer. From a documentary point of view, however, like social bonds (see related information), green bonds require the issuer to publish one or more documents intended to report on the use that has been made of the funds raised and, where possible, to measure the environmental impact of the expenses made. To date, the issuance of green bonds by States and companies is a phenomenon that is growing considerably in various parts of the world. The European Union, in parallel with the launch of the European Green New Deal, started at the beginning of 2020 the definition of the European Green Bond Standards to create a homogeneous framework that provides incentives to the development of green bonds in Europe.

Edited by: CONSOB

Bonds issued regularly by the Ministry of Economy and Finance, through the Treasury Department, to finance the needs of the State and such as to represent a form of investment for citizens; there are different types of Italian Government Bonds: BOTs, BTPs, BTP €i, CTZs) and CCTeu.

Edited by: CONSOB

The maximum amount provided for in the contract that the insurance undertaking is required to pay in the event of a claim. If the damage caused or suffered exceeds this amount, the difference remains at the expense of the insured. For motor liability, the law sets the minimum thresholds of the ceiling, below which companies cannot fall.

Edited by: IVASS

Insurance that protects the insured from the economic consequences of an alteration in their state of health that originates within the human body and does not depend on an accident, i.e., on a cause external to the body (see Accident Insurance Policy). The Health Insurance Policy generally provides that the insurance coverage becomes effective once the so-called contractual “waiting period” has passed, which begins to run from the date of validity of the contract. During this period, any claim is not under guarantee.

Edited by: IVASS

See also the term: Accident Insurance Policy

Code used to uniquely identify, internationally, a customer’s account with a financial intermediary. Italian International Bank Account Numbers (IBANs) are 27 characters long and begin with IT.

Edited by: Bank of Italy

Sum payable by the insurance undertaking to the insured of a non-life policy in the event of a claim.

Edited by: IVASS

See also the term: Compensation (of a claim)

Individual long-term savings plans, introduced in Italy by the 2017 Budget Law, are “fiscal” containers that can take various forms (mutual funds, life insurance policies, asset management) and hold different forms of financial products (shares, bonds, ETFs, savings and current accounts) provided that the limitations provided for by law are respected in the composition of the portfolios. The objective of the Individual long-term savings plans is to direct savings towards Italian small and medium-sized enterprises with the result of stimulating the national economy. The scheme follows the one already tested in other countries, such as France (with the Plan d’Epargne en Actions (PEA)) and in the United Kingdom (with the Individual Savings Accounts (ISAs)).

Edited by: CONSOB

The Individual Insurance Pension Plan is a form of private supplementary pension set up by insurance companies. The total assets of the Individual Insurance Pension Plans managed by the same insurance undertaking constitute separate and autonomous assets from those of the insurance undertaking that establishes them and are intended exclusively for the payment of benefits to those enrolled.

Edited by: COVIP

In market economies, the prices of goods and services can change at any time: some go up, some go down. We speak of inflation when there is a significant increase, which is not limited to individual items of expenditure (in fact, we speak of a “generalised” increase in the price level).

When calculating the average price increase, more weight is given to changes in goods and services on which consumers spend more (e.g., food, energy) than to less significant items of expenditure.

All goods and services consumed by households during the year are represented by the so-called “basket”. Each item of expenditure contained in the basket has a price, which can vary over time. The 12-month inflation rate corresponds to the price of the total basket in a given month compared to the same month of the previous year.

Edited by: CONSOB

It is the document that intermediaries make available to customers for each product or service offered; it contains information about the intermediary, the conditions and the main characteristics of the transaction or service. The contents of the contract must be consistent with the information contained in the Information Sheet.

Edited by: Bank of Italy

INPS, the National Institute for Social Security, is the Italian social security institution that manages the compulsory social security contributions paid by employees and most self-employed workers. It provides compulsory pensions and welfare and income support benefits.

Edited by: COVIP

A contract by which the insurance undertaking, in return for payment of a premium, undertakes to compensate the insured, within the agreed limits, for the damage caused to him/her by an accident (in non-life insurance) or to pay a lump sum or annuity upon the occurrence of an event relating to human life (in life insurance).

Edited by: IVASS

Communication that the policyholder is required to send to the company, or vice versa, within a notice period set by the contract, to avoid tacit extension if provided for by the policy conditions.

Edited by: IVASS

Subject exposed to the risk covered by the insurance. It can be a person other than the policyholder. In non-life insurance, it is the person in whose interest the contract is stipulated, who has the right to any compensation. In life insurance, it is the natural person to whom the event relating to human life referred to in the contract refers and, if different from the policyholder, he/she must accept the contract in writing.IVASS

Edited by: IVASS

Subject exposed to the risk covered by the insurance. It can be a person other than the policyholder. In non-life insurance, it is the person in whose interest the contract is stipulated, who has the right to any compensation. In life insurance, it is the natural person to whom the event relating to human life referred to in the contract refers and, if different from the policyholder, he/she must accept the contract in writing.

Edited by: IVASS

Micro insurance policy that covers specific and often imminent events and can therefore be taken out quickly through digital channels; it covers a limited period of time, even daily, in conjunction with particular events. It typically comes as a pay-per-use product: the payment of the policy is based on its actual use.

Edited by: IVASS

Insurance products that have a maturity value or a surrender value that are exposed to fluctuations in the financial markets at different stages.

Edited by: IVASS

Probability of the occurrence of the harmful event covered by the guarantee, i.e., the accident.

Edited by: IVASS

See also the term: Claim

The term derives from the union of two terms, insurance and technology, and indicates technological innovation applied to the insurance field. We talk about InsurTech with regard to the offer of insurance services that are characterised by high technological profiles. By way of example, we talk about InsurTech with reference to embedded insurance, instant insurance and automated insurance advice services (or robo advice).

Edited by: IVASS

It is the bank deposit guarantee system recognised by Banca d’Italia: if a bank is put into compulsory administrative liquidation, the fund ensures depositors the reimbursement of sums in a short time, up to a maximum of EUR 100,000. The protection is available for the bank and for each depositor. All Italian banks are members, except for cooperative credit banks which have their own specific guarantee fund that ensures similar protection (the Cooperative Credit Depositors’ Guarantee Fund).

To learn more: https://economiapertutti.bancaditalia.it/notizie/il-fondo-interbancario-di-tutela-dei-depositi/

Edited by: Bank of Italy

The interest rate indicates how much it costs to borrow money and how much the return is to lend money. For example, for the depositor, the interest rate indicates how much money he/she will receive from the bank after a year in exchange for the deposit of one hundred euros; for the bank, on the other hand, it is the cost it will have to pay to the depositor on the same sum.

Edited by: Bank of Italy

The OECD International Network on Financial Education (INFE), established in 2008, promotes and facilitates international cooperation between policy-makers and other stakeholders on financial education issues around the world. INFE members come from more than 130 countries and economies, including developed, emerging and developing economies and include all G20 countries.

To learn more: https://www.oecd.org/en/networks/infe.html

Edited by: Bank of Italy

Certificates are securitised derivative financial instruments, traded on regulated markets, which replicate the performance of the underlying asset.

Edited by: CONSOB

The Italian social security system, as the name implies, refers to social security and consists of three pillars: the first consists of compulsory social security, the second of collective supplementary pension and the third of individual supplementary pension.

Edited by: COVIP

IVASS, the Institute for the Supervision of Insurance Undertakings, works to ensure the adequate protection of policyholders by pursuing the sound and prudent management of insurance and reinsurance undertakings and their transparency and correctness towards customers.

Edited by: IVASS

It is a word of Japanese origin that literally means “household account book”, or a kind of diary in which to record income and expenses. It is a method that can help one sort, classify, and control one’s daily expenses in a simple and systematic way.

Edited by: Bank of Italy

With the entry into force, as of 1 January 2018, of the European Regulation on PRIIPs (Packaged Retail and Insurance-based Investment Products) relating to packaged retail and insurance-based investment products, the basic information regarding these products is all contained in the KID, a concise and standardised information document prepared by the issuer/provider with the aim of depicting the characteristics of the product in a easily usable and understandable for the investor. The aim is to ensure comparability between the different products and to increase the degree of transparency of information regarding these tools.

Edited by: CONSOB

Periodic payment of money that the insurance undertaking is obliged to pay to the entitled person for the entire duration of the insured person’s life.

Edited by: IVASS

Life expectancy expresses the average number of years that one can be expected to live. In common parlance, life expectancy usually refers to the average life span or average lifespan, i.e., the years that a newborn could expect to live. In the field of social security, on the other hand, reference is usually made to life expectancy at a certain age. For example, life expectancy at 65 indicates the number of years a 65-year-old person could expect to live.

Edited by: COVIP

Insurance that allows beneficiaries to receive a lump sum in the event of the death of the insured. The most common types of term life insurance are: the temporary policy, also called Temporary Life Insurance and the Whole Life insurance.

Edited by: IVASS

See also the term: Temporary Life Insurance Policy

See also the term: Whole life Insurance Policy

The risk of not being able to promptly disinvest (due to the lack of a reference market) the security purchased if the need arises, without rapidly incurring serious losses, or by doing so one loses a great deal compared to the amount invested. Very frequent indicators of liquidity risk refer to the number and frequency of trades (so-called turnover) made on the security. Typically, the higher the turnover, the lower the liquidity risk.

Edited by: Bank of Italy - CONSOB

Part of the premium that covers commercial, administrative and any other costs incurred by the insurance undertaking for the sale and management of the policy.

Edited by: IVASS

There is a risk that living longer than one can reasonably expect, savings are not enough to face old age serenely.

Edited by: COVIP

Insurance that guarantees economic support, temporary or lifelong, in the event of loss of self-sufficiency with reference to basic activities of daily life, due to illness, accident or advanced age.

Edited by: IVASS

In supplementary pensions, the worker who has paid at least 5 years of contributions to the pension fund, once he/she has reached the requirements to be able to receive a public pension, can request his/her supplementary pension from his/her fund. The member can choose to immediately receive up to 50% of the accumulated amount, the so-called lump sum benefit, and to receive the remaining 50% through a monthly annuity or to have the full value of their individual position in the form of a monthly annuity.

The possibility of receiving the sum accrued in the pension fund in full as a lump sum is allowed in the event that, by converting 70% of the final amount into an annuity, the result is less than 50% of the social allowance.

Edited by: COVIP

See also the term: Annuity

It is the risk relating to the effects caused by the change of one or more market conditions on the value of a financial instrument or a portfolio of financial instruments (or, more generally, of financial assets and liabilities). The variables that influence market trends can be different and correspond to specific subcategories of market risk, such as interest rate risk (due to changes in interest rates); exchange rate risk (due to changes in exchange rates between reference currencies); commodity risk (linked to changes in commodity prices, especially precious metals and energy products); equity risk (due to the variability of share prices).

Edited by: CONSOB

So-called mental accounting, the tendency to divide available resources into separate accounts according to subjective criteria, such as their source or use, and to develop differentiated attitudes towards risk depending on the account (for example, risk aversion to the account fed by income from work and risk appetite in the account into which occasional income flows). The result is, therefore, an approach that is inconsistent with the logic of the portfolio and with the principle of fungibility of money.

Edited by: Bank of Italy

This is the European legislation governing investment services and activities, which came into force on 3 January 2018 (replacing the so-called MiFID 1, from which it takes up principles and purposes). The aim of the system of rules is to develop a single market for financial services in Europe, in which transparency and investor protection are ensured. There are various provisions which, as they are inspired by the financial intermediary’s duty to act in the best interest of the customer, aim at ensuring correct information for investors, dealing with potential conflicts of interest between the parties and they require adequate investor profiling.

Edited by: Bank of Italy - CONSOB

It is the tool typically used by intermediaries for the suitability assessment. The questionnaire contains a series of questions aimed at collecting the information mentioned above. Each intermediary uses its own questionnaire. An intermediary who does not collect sufficient information to correctly profile the client is prohibited from providing advisory or portfolio management services.

Edited by: CONSOB

See also the term: Suitability

Insurance that operates both in the event of the death of the insured by a certain date and in the event of his/her survival beyond a certain date, guaranteeing the payment of a lump sum:

• to the insured, if he/she is alive at the predetermined maturity;
• to the beneficiaries indicated in the contract, in the event of the death of the insured during the term of the contract.

Edited by: IVASS

Sending money made by a foreign worker to his/her household in the country of origin.

Edited by: Bank of Italy

In terms of personal finance, monetary savings is the portion of income (from work or invested capital) that is not spent in the period in which the income is received, but is set aside to be used at a future time. Saving is therefore giving up present consumption, with a view to greater future consumption (because saving, if invested, can produce a return) or, for example, to cope with unexpected expenses or to be prepared to face planned events in one’s life. In order to identify and/or maintain the level of savings that best suits one’s needs, it is useful to familiarise oneself with the financial planning process, which means analysing one’s present and future needs and expectations and, on the basis of these, monitoring income and expenses as a necessary step for the formulation of spending targets, savings and investment. The concept of savings is linked to that of investment, with which it is often associated and, sometimes erroneously, used as a synonym.

Edited by: Bank of Italy

A right of guarantee on a certain asset, usually a property. The owner, who has applied for the mortgage, can continue to live in the mortgaged property, rent it or sell it. If the debtor can no longer pay his debt, the creditor can obtain the expropriation of the asset and have it sold to meet the amount with the proceeds.

Edited by: Bank of Italy

Mortgage loans are the main form of medium-long term financing that banks and other financial intermediaries grant. It is mainly used for the purchase of real estate, in particular the residential house, but it can also be used to build or renovate a property and to replace or refinance mortgages already obtained for the same purposes. It is defined as a mortgage because the repayment to the bank is guaranteed by a mortgage on the purchased property. Mortgage loans usually have a term of 5 to 30 years and are the most popular form of real estate credit.

To learn more: https://economiapertutti.bancaditalia.it/chiedere-prestito/mutuo-ipotecario/index.html

Life insurance policies that combine traditional insurance coverage with financial guarantee by the insurance undertaking (see contract with revaluable benefits) with a Unit-linked product.

Edited by: IVASS

See also the term: Contract with benefits that can be revalued

See also the term: Unit-linked Insurance Policy

Mutual funds are investment instruments, managed by asset management companies (SGRs) that collect the sums of several savers and invest them, as a single asset, in financial assets (shares, bonds, government bonds, etc.) or, for some of them, in real estate, respecting rules aimed at reducing risks. They are divided into many unit parts, called “quotas”, which are subscribed by savers and guarantee equal rights. There are different types. One of the most important distinctions is between “open-ended funds” (which allow one to subscribe to units, or request their redemption, at any time; these funds normally invest in listed financial assets) and “closed-end funds” (which allow one to subscribe to units only during the offer period, which takes place before starting the actual operations, and normally repay them only at the maturity of the fund; closed-end funds are reserved for illiquid and long-term investments, e.g., real estate, receivables, unlisted companies).

Edited by: CONSOB

The negotiated pension fund is a form of private supplementary pension set up by the representatives of workers and employers in the context of national, sectoral or company collective bargaining in favour of the category of workers affected by the same bargaining. The negotiated pension fund is a legally autonomous body, distinct from the promoters, and is non-profit.

Edited by: COVIP

It is a loan not linked to the purchase of a specific good or service, which can be used freely for general liquidity needs.

To learn more: https://economiapertutti.bancaditalia.it/chiedere-prestito/prestito-personale/index.html

Edited by: Bank of Italy

In the language of the Central Credit Register (Centrale dei Rischi, CR), we speak of non-performing when the customer is assessed by the bank or financial company as “insolvent”, i.e., unable to pay off his/her debt definitively. The classification as non-performing is the result of the assessment of the customer’s overall financial situation and is independent of the ascertainment of insolvency in court; therefore one can be classified in Central Credit Register as a non-performing debtor even without a judicial assessment of insolvency.

Edited by: Bank of Italy

The open-ended pension fund is a form of private supplementary pension set up by banks, insurance companies, asset management companies (SGRs) and stock brokerage firms (SIMs). Open-ended pension funds are set up in the form of separate and autonomous assets from those of the company that established them and are intended for the payment of benefits to those enrolled. The assets cannot be used to meet the rights claimed by any creditors of the company in the event of bankruptcy of the latter.

Edited by: COVIP

In the opening of credit or a credit line in a current account, also commonly known as “overdraft”, the bank makes available to the customer, on the current account, a sum up to a predetermined maximum amount for a fixed or indefinite period. It is possible to apply for this form of credit to deal with temporary liquidity needs, in the event of late payments, periods of accumulation of maturities, temporary needs for money. The current account credit facility must not be requested to finance a business permanently, because the cost is certainly higher than other types of loans.

Edited by: Bank of Italy

It is the conclusion of agreements to buy or sell one or more financial instruments on behalf of customers and includes the conclusion of agreements for the sale of financial instruments issued by an investment firm or credit institution at the time of their issue. It is one of the investment services/activities regulated by Directive 2014/65/EU - the so-called MiFID2 (Market in Financial Instruments Directive).

Edited by: CONSOB

Attitude to have excessive confidence, or excessive confidence, in one’s own abilities and knowledge.

To learn more: https://economiapertutti.bancaditalia.it/video/video-comportamentali/video-1571924567247/?dotcache=refresh

See also the term: Cognitive and behavioural biases

The law speaks of over-indebtedness when the debtor is unable to repay his/her debts in a regular manner, even considering the economic resources of the following twelve months. People may find themselves in this situation because they have not carefully assessed their ability to repay debts or because unforeseen and involuntary events have occurred, which lead to new outgoing expenses (e.g., medical expenses) or lower income (loss of work, redundancy fund, illness). In the event of over-indebtedness, the debtor can access specific procedures, useful for resolving his/her financial difficulties.The law speaks of over-indebtedness when the debtor is unable to repay his/her debts in a regular manner, even considering the economic resources of the following twelve months. People may find themselves in this situation because they have not carefully assessed their ability to repay debts or because unforeseen and involuntary events have occurred, which lead to new outgoing expenses (e.g., medical expenses) or lower income (loss of work, redundancy fund, illness). In the event of over-indebtedness, the debtor can access specific procedures, useful for resolving his/her financial difficulties.

Edited by: Bank of Italy

Use by the holder of a current account of funds without having a credit line or use of a loan beyond the amount granted.

Edited by: Bank of Italy

It is defined as the negotiation for the purpose of concluding transactions concerning one or more financial instruments in which the dealer commits own capital. It is one of the investment services/activities regulated by Directive 2014/65/EU - the so-called MiFID2 (Market in Financial Instruments Directive).

Edited by: CONSOB

A payment account is a bank account, a postal current account and any product that allows one to carry out basic payment transactions (depositing funds, withdrawing cash, executing and receiving payment transactions, using payment cards). All consumers who reside legally in the European Union, without discrimination and regardless of their place of residence, have the right to open a payment account with basic features, with some limited exceptions.

Edited by: Bank of Italy

For consumer current accounts, portability is an operation by which the customer can request to transfer the positive balance of the old account and recurring payment services (e.g., direct debit of utilities and mortgage instalments, crediting of salary or pension, etc.) to the account opened with a new operator. Requesting portability does not automatically imply the closure of the old account: to close the relationship with the old operator there must be no pending obligations and the customer must expressly request its closure, in addition to portability.

To learn more: https://economiapertutti.bancaditalia.it/informazioni-di-base/portabilita/index.html

The Payment Service Provider (PSP) is an entity accredited to provide payment services and instruments to citizens and companies. PSPs are all entities authorised to offer a payment account, such as banks, Poste Italiane (Bancoposta), payment institutions and electronic money institutions.

Edited by: Bank of Italy

The pension fund is a long-term savings financial instrument that allows one to supplement the basic pension provided by INPS or other social security institutions. For further information on the different forms of supplementary pensions, see the terms negotiated pension fund, open-ended pension fund, pre-existing pension fund, Individual Pension Plan (Piano Individuale Pensionistico, PIPI).

Edited by: COVIP

Permanent and irreparable loss, total or partial, of the insured’s ability to carry out any profitable work or to carry out his/her specific work activity.

Edited by: IVASS

The personal loan is a type of financing that falls into the category of non-finalised consumer credit, disbursed to meet generic liquidity needs. All needs concerning professional activities are therefore excluded from this type of financing. The lender pays the sum to the consumer in a lump sum and the consumer returns it in instalments.

To learn more: https://economiapertutti.bancaditalia.it/chiedere-prestito/prestito-personale/index.html

Bond with traditional/standard characteristics without derivative components.

Edited by: CONSOB

Portfolio management is the investment service/activity, regulated under Directive 2014/65/EU (the so-called MiFID2 or Market in Financial Instruments Directive), offered by the intermediary who, on a discretionary and individualised basis, manages an investment portfolio within a mandate conferred by the customer; in other words, the intermediary decides on behalf of the customer which products will make up his/her portfolio and also provides for all the operations necessary to buy or sell them, where those portfolios include one or more financial instruments. It is one of the investment services/activities regulated by Directive 2014/65/EU - the so-called MiFID2 (Market in Financial Instruments Directive).

Edited by: CONSOB

A natural or legal person who signs the insurance contract, is required to comply with the obligations deriving from it (first and foremost the premium payment) and manages the administrative obligations. The policyholder may not be the same as the insured.

Edited by: IVASS

Investment operation proposed by subjects (usually fraudsters) where the money given by new investors is used to pay those who have invested in the past.

Edited by: CONSOB

Insurance related to mortgages and loans, through which the debtor is covered against the risk of not being able to repay a loan. It fully or partially protects the debtor’s ability to repay the loan in the event of death, permanent disability due to accident or illness, loss of employment.

Edited by: IVASS

The pre-existing pension fund is a form of private supplementary pension usually set up by the representatives of workers and employers in the context of national, company or sectoral collective bargaining in favour of the category of workers affected by the same bargaining.

As the term “pre-existing” suggests, these funds were established before the supplementary pension system was organically regulated.

The pre-existing pension fund can be a legally autonomous body, distinct from the promoters; it can be constituted as separate assets from the company that establishes it or as an accounting item. The pre-existing pension fund is non-profit.

Edited by: COVIP

Amount of money paid by the person who takes out insurance to purchase the guarantee offered. The payment of the premium is, as a rule, a condition for the effectiveness of the guarantee.

Edited by: IVASS

It is an electronic payment instrument, issued against an advance payment of funds made by the holder to the issuer, the value of which decreases each time it is used to make payments or withdrawals. With a prepaid card it is therefore possible to purchase goods or services, or withdraw cash at ATMs, within the limits of the amount previously paid to the institution that issued it.

Read more: https://economiapertutti.bancaditalia.it/pagare/carta-prepagata/index.html/p>

Edited by: IVASS

The prepaid card with IBAN or account card, so called because it has an IBAN (International Bank Account Number) code, allows one to carry out the main operations of a current account, through transfers or direct debits, such as, for example, crediting one’s salary or pension, domiciling utilities.

Read more: https://economiapertutti.bancaditalia.it/pagare/carta-prepagata/index.html

See also the term: IBAN

Independent public comparator created by IVASS and the Ministry of Enterprises and Made in Italy and available on their respective websites, which allows one to compare the rates and contractual conditions relating to the basic motor vehicle civil liability contract offered by each insurance undertaking free of charge.

Too learn more: https://www.preventivass.it/home

It is the market where newly issued financial instruments are offered.

Edited by: CONSOB

It is the acronym for “packaged retail and insurance investment products”. This definition covers all products, regardless of their form or structure, designed by the financial services industry to provide investment opportunities to retail investors and for which the return to the investor is subject to fluctuations due to exposure to benchmarks or subject to the performance of one or more assets that are not purchased directly by the retail investor. Regulation (EU) no. 1286/2014 (known as the PRIIPS Regulation) introduced the obligation to draw up a document containing the so-called “Key Information Document” (or “KID”) effective from 1 January, 2018.

Edited by: CONSOB

Private compulsory social security institutions intended for professionals (e.g., doctors, attorneys, accountants) who have the task of collecting and managing the social security and welfare contributions of their members, providing them with pensions and providing income support and assistance services. Registration and payment of contributions is mandatory.

Edited by: COVIP

This is the document that contains information regarding the characteristics of the product, issuer or manager (in the case of funds) as well as the related risks, to be drawn up on the basis of the indications provided by the relevant regulations at European level. In the case of an offer to the public and/or admission to trading of a financial instrument on a regulated market, it is necessary to publish a prospectus, so that the potential investor is put in a position to make informed investment choices.

Edited by: CONSOB

The Quaderno dei Conti is a calculation tool that allows one to build one’s budget through the list of income and expenses, periodically monitoring their progress and identifying present and future economic needs.

Go to page: Quaderno dei Conti

When the social security contributions paid in the calendar year of reference for active workers are used to finance the payment of pension benefits of those who are already retired. In this regime there is no accumulation of resources in individual accounts.

Edited by: COVIP

It is a method of calculating the pension that is based on the length of years of contribution accrued and the average of the salaries received in the last years of working life.

Edited by: COVIP

In the field of social security, the replacement rate is a percentage number that expresses the ratio between the first annual pension instalment collected and the last annual salary received. For example, a replacement rate of 60% means receiving an annual pension in the first year of retirement equal to 60% of the salary received in the year prior to retirement.

In jargon, we also speak of the “pension gap”, i.e., the difference in pension income compared to work income.

Edited by: COVIP

Age at which a worker can retire, having accrued the requirements provided for by law.

Edited by: COVIP

In finance, return is the percentage change in the value of an investment over a given period of time. Unless otherwise specified, the return is expressed in nominal terms, i.e., without taking inflation into account. In this case, therefore, we speak of nominal return. If the nominal return is adjusted from the rate of inflation, the real return over a given period is obtained. A positive real return indicates that the real value of our investments (the purchasing power of our savings) has grown, so we can buy more goods and services than before. Conversely, a negative real return indicates a loss of purchasing power.

Edited by: Bank of Italy - CONSOB

Risk diversification refers to the possibility of reducing the riskiness of an investment or a portfolio of securities or assets by allocating capital to different financial instruments and/or products, whose returns are not perfectly correlated with each other. In other words, to diversify risk, it is advisable not to put all your eggs in one in one basket, i.e., not to invest your savings in a single product (or in a single type of product with very similar risk characteristics).

Edited by: CONSOB

The ability to take financial risk and deal with situations of uncertainty. The level of risk tolerance of each individual typically depends on multiple factors, such as individual personality and inclinations, specific emotional state, gender, level of financial culture.

Edited by: IVASS

See also the term: CONSOB

They are derivative financial instruments, whose main feature - in addition to being exclusively about currencies - consists in the fact that the investor can keep his/her position open thanks to a mechanism, called roll-over, by which the transactions closed at the end of the day are automatically reopened on the following day.

Edited by: CONSOB

It is an asset that has an intrinsic, “real” value, which tends to retain its value even after an increase in the general price level. Investing in a safe-haven asset is generally not for speculative purposes, but rather to protect against a period of economic (and financial) crisis or a period of strong price instability. Examples of safe-haven assets are gold (like other precious commodities such as silver, platinum), diamonds, real estate, government bonds of economically and financially more solid Countries, some currencies considered reliable (also because they are used on a large scale in world trade).

Edited by: CONSOB

A salary-backed loan is a particular type of personal loan, intended for employees and retirees. The repayment of the instalments takes place through the transfer of a portion of the salary or pension in favour of the lender. This portion, deducted directly from the paycheck, cannot exceed one fifth of the monthly net emolument.

Edited by: Bank of Italy

The SECCI (Basic European Information on Consumer Credit) form contains all the information useful for the consumer to evaluate the credit offer in the most transparent way. It must be delivered to him/her before he/she signs any financing contract.

To learn more: https://economiapertutti.bancaditalia.it/notizie/il-secci-e-il-pies-due-strane-sigle-che-ci-tutelano-quando-chiediamo-un-prestito/

Edited by: Bank of Italy

It is the market where the securities already in circulation are traded.

Edited by: CONSOB

La The securities deposit is a support account, linked to a current account, that the saver must open when he/she decides to invest in shares, bonds, warrants, derivatives, fund units and other financial products. By opening the securities deposit and custody, the intermediary undertakes to keep and administer the securities and financial instruments, as well as to receive and execute the purchase, sale, subscription and redemption orders given by the customer. In addition, the intermediary carries out the accounting registration of the instruments, takes care of the collection of interest and dividends, the renewal and collection of coupons and, on the express assignment of the customer, proceeds with specific operations such as the exercise of pre-emption rights, conversion and payment of tenths.

Edited by: Bank of Italy

A transaction by which a company (called an originator) transforms a non-liquid (non-marketable) financial or real asset or a portfolio of non-marketable assets or instruments (e.g., loans granted by a bank) into marketable financial instruments by receiving liquidity. The transaction is carried out through the sale of the assets to a specially established external special purpose vehicle that raises the funds by issuing bonds in tranches of different risk (senior, mezzanine, junior) necessary for financing the originator.

Edited by: CONSOB

The SECCI (Basic European Information on Consumer Credit) form contains all the information useful for the consumer to evaluate the credit offer in the most transparent way. It must be delivered to him/her before he/she signs any financing contract.

To learn more: https://economiapertutti.bancaditalia.it/notizie/il-secci-e-il-pies-due-strane-sigle-che-ci-tutelano-quando-chiediamo-un-prestito/

Edited by: Bank of Italy

Investment portfolio managed separately from other assets held by the insurance undertaking, which includes premiums paid by policyholders who have entered into a contract with benefits that can be revalued and depending on their performance, the benefits of the contracts linked to it are revalued.

Edited by: IVASS

See also the term: Contract with benefits that can be revalued

In supplementary pensions, the Self-Assessment Questionnaire is a tool that helps potential enrolled persons to verify their level of knowledge in pension matters and to find their way around the different investment options offered by the pension fund. The Questionnaire, which must be completed before enrolling, allows the financial profiling of the potential enrolled person in the same way as for other investments of a financial nature. Once one has joined the supplementary pension scheme, it may be useful to fill out the Self-Assessment Questionnaire again to check over time whether the choices made initially (regarding, for example, the investment line) are still suitable.

Edited by: COVIP

Shares are the individual unit parts into which the capital of joint-stock companies is divided. The holder of a share, therefore, owns a “piece” of the company, with all the rights and charges that derive from it. Shares are also a credit instrument, i.e., an instrument that incorporates a right and facilitates its transmission to other parties. Shares can be listed or unlisted. In the first case, it is easier to buy or sell them at a market price.

Edited by: CONSOB

These are bonds issued with the aim of using the funds raised to carry out projects with a positive social impact. From a financial point of view, they do not have specific characteristics that in principle differentiate them from other securities placed by the same issuer. From a documentary point of view, however, like green bonds, social bonds require the issuer to publish one or more documents intended to report on the use that has been made of the funds raised and, where possible, to measure the social impact of the expenses made. To date, the issuance of social bonds by States is still a relatively rare phenomenon.

Edited by: CONSOB

See also the term: Green bond

A tool through which, through online platforms, a plurality of subjects can request repayable funds from a plurality of potential financiers for personal use or to finance a project. It is therefore a way of borrowing and lending.

Edited by: Bank of Italy

The abnormal increase in the price of an asset, whether real or financial, fuelled by unfounded growth expectations of the issuing company or the reference sub-fund, i.e., not justified by the information expressed by traditional profitability indicators (e.g., earnings produced, tangible assets, cash and cash equivalents, growth forecasts). Typically, the triggering of the bubble is followed by an initial phase in which expectations end up being self-fulfilling and mass purchases (also due to imitative behaviour) generate a marked overestimation of the issuing companies; subsequently, one or more events usually make the expectations of important earnings waver, inducing high sales flows and the final collapse of the price of the product (the bursting of the bubble).

Edited by: CONSOB

See also the term: Cognitive and behavioural biases

In finance, spread is an umbrella term that indicates a difference between the prices, returns or interest rates of two financial instruments.

In the case of Italian government bonds, “the spread” is the difference between the yield of an Italian government bond, a BTP maturing in 10 years, and the yield of a German government bond, a Bund, with the same maturity. It is a measure of the riskiness of investing in Italian public bonds and the degree of reliability of our Country: the greater the spread, the greater the risk.

In the case of mortgages, the spread is the difference between the rate actually applied and the benchmark rate (e.g., Euribor or Eurirs).

Edited by: Bank of Italy

The stock exchange is a financial market where securities and foreign currencies are traded. It is a secondary market because it trades financial instruments that have already been issued and are therefore already in circulation, but it is also an official (or regulated) market since all trading operations, their methods and the operators and types of contracts allowed are specifically regulated.

Edited by: CONSOB

It is a security consisting of a bond and one or more components defined as derivative, usually of the option type. The bond part determines the repayment of the principal at maturity (for the entire nominal value) plus any periodic coupons, while the derivative component defines the variability of the return.

Edited by: CONSOB

Structured deposits are complex financial instruments that combine the characteristics of a banking product, the deposit, with the characteristics of an investment product. They are offered by banks and other financial intermediaries that, in exchange for the borrowed resources, offer a variable return linked to indicators such as indices, financial instruments, commodities or exchange rates. Like traditional deposits, they are covered by the guarantee of deposit protection funds up to EUR 100,000 per person per intermediary. They can be illiquid, as a time constraint is generally imposed on the resources granted as a loan and can have a variable duration if the early repayment option is provided. Structured deposits do not include floating-rate deposits whose yield is directly linked to an interest rate.

Edited by: Bank of Italy

Investment option offered by the pension fund characterised by a specific risk-return combination and an investment time horizon. Investment options differ based on the financial instruments that are purchased.

Edited by: COVIP

In investment advisory and portfolio management services, customer profiling and suitability assessment consist of gathering information about the customer’s investment knowledge and experience (and of specific products/services), their financial situation and investment objectives and the subsequent assessment by the intermediary of the products to be recommended or invested in on behalf of the customer. In the event that the intermediary/adviser does not receive from the customer the information necessary for the suitability assessment, he/she must refrain from providing the service.

Edited by: CONSOB

The summary note is a part of the prospectus, in which the key information relating to an investment that is proposed is represented, in non-technical language. The summary note is drawn up in a common format to facilitate comparison between different financial products.

Edited by: CONSOB

The Supervisory Body and Maintenance of the Single Register of Financial Advisers – in short “OCF” (Organismo di vigilanza e tenuta dell'albo unico dei Consulenti Finanziari) – is the body provided for by Art. 31, paragraph 4, of Italian Legislative Decree no. 58 of 24 February 1998 (Consolidated Law on Finance - Testo Unico della Finanza, TUF) established in the form of a non-profit association, with legal personality under private law since 11 October 2007, constituted by the professional associations representing the members as established by Art. 145 of the Intermediaries Regulation. The OCF, established on 25 July 2007 as the “Body for the keeping of the Register of Financial Advisers” – APF, began its operations on 1 January 2009 following resolution no. 16737 of the National Commission for Companies and the Stock Exchange (Commissione Nazionale per le Società e la Borsa, CONSOB) of 18 December 2008 and took on its current name provided for by the so-called Stability Law for 2016 (Italian Law no. 208 of 28 December 2015).

On 28 June 2018, a memorandum of understanding was signed between OCF and CONSOB and on 2 July 2018, with resolution no. 20503 adopted by Consob on 28 June 2018, it was established that OCF would start operations limited to the preparatory activities for the registration of independent financial advisers and financial advisory firms pursuant to Art. 7 of Italian Ministerial Decree no. 206/08 (transitional regime) and the preliminary functions for supervisory proceedings pursuant to Art. 7 septies, paragraph 2 and 196 of the TUF toward financial advisers qualified to offer off-site services in accordance with the transitional regime envisaged.

On 10 August 2018, OCF and CONSOB signed a further memorandum of understanding regarding the disclosure of the OCF’s externally relevant provisions and the most significant acts and events to be communicated to CONSOB.

The full transfer of the new functions to OCF took place on 1 December 2018 with CONSOB resolution no. 20704 of 15 November 2018 following the assessment conducted by the Authority. CONSOB continues to supervise the Body pursuant to Art. 31, paragraph 4 of the TUF.

Edited by: OCF

It is the pension paid by pension funds that supplements the compulsory one, but does not replace it. The supplementary pension can be requested once the pension age has been reached, with at least five years of participation in supplementary pension schemes.

Edited by: COVIP

It is the commitment to personally guarantee the creditor the payment of another person’s debt. The guarantee is personal because the creditor can claim against the guarantor’s entire assets.

Edited by: Bank of Italy

Insurance under which the insurance undertaking undertakes to pay the third party beneficiary a certain sum of money in the event of non-performance of a principal obligation by the insured.

Edited by: IVASS

The right granted to the policyholder of a life insurance policy by the Civil Code and regulated by the contract signed, to terminate the insurance relationship early and to obtain a capital (reduced compared to that which would be due at the maturity of the contract) from the insurance undertaking.

Edited by: IVASS

A financial transaction carried out with an intermediary which, due to objective connotations (characteristics, entity, nature) and in relation to the subjective position of the customer (economic capacity and activity carried out), leads to the belief that the sums used may be of illegal origin. Anti-money laundering legislation regulates the reporting of suspicious transactions and the fight against illegal ones.

Edited by: Bank of Italy

It includes all financial services that integrate environmental, social and governance (ESG) criteria into the research, analysis and selection of investments, with a long-term view or, in any case, with a view to bringing lasting benefits to the environment and society.

Edited by: Bank of Italy - CONSOB

This is a European indicator introduced by Bank of Italy to increase the transparency of communications to consumers. It represents an indicative cost calculated on different profiles of use (young people, families with low, medium and high amounts of transactions, pensioners with low and medium amounts of transactions). It is used to immediately compare the costs of the different current accounts offered by banks. It can be very different from the cost actually incurred at the end of the year, depending on the actual use one makes of the account. It is information reported within the information document on expenses, which the bank is obliged to provide to the customer before opening a current account.

Edited by: Bank of Italy

Total or partial inability to carry out one’s occupations for a limited period of time.

Edited by: IVASS

Insurance with a predetermined duration, chosen by the policyholder, in which the capital is paid by the insurance undertaking only in the event that the event covered (the death of the insured) occurs during the period of validity of the policy. If the insured person is still alive at the end of the period provided, the contract is concluded and the premiums paid remain with the insurance undertaking.

Edited by: IVASS

Also known as “severance pay”, the Employee Leaving Severance Indemnity is a sum of money paid to the employee at the time the employment relationship ends. It is calculated by adding for each year of work a share equal to the salary divided by 13.5. The total amount set aside is revalued every year at a rate that has a fixed part (1.5 percent) and a variable part linked to inflation.

Edited by: COVIP

Compulsory insurance for all motor vehicles that protects the driver or owner of the vehicle against the risk of having to compensate third parties for damage involuntarily caused to persons or property by the use of the insured vehicle.

Edited by: IVASS

It is an operation that consists of buying a good or financial asset on one market and selling it on another market, taking advantage of price differences in order to make a profit.

Edited by: CONSOB

In supplementary pensions, the transformation coefficient (into an annuity) is a number that is applied to the contribution amount accumulated by the enrolled person to calculate the amount of the supplementary pension to which he/she is entitled. The coefficient is determined on a statistical basis, varies according to the age of the enrolled person at the time of retirement and takes into account some characteristics of the enrolled person, including the average remaining life expectancy and gender.

Edited by: COVIP

Contractual clause according to which a percentage of the damage, with any minimum limit expressed in absolute value, remains at the expense of the policyholder in the cases provided for by the policy conditions.

Edited by: IVASS

Life insurance, included in the Insurance-Based Investment Products (IBIP), in which the value of the benefit is directly linked to the trend in the value of the units of “internal” investment funds, created specifically by the insurance undertaking, or to that of “external” funds, in which the premiums paid are invested. It should be considered that the unit-linked insurance policy, as an insurance product, must necessarily have a social security purpose alongside that of investment. That is, it must pay the beneficiary a sum upon the occurrence of the event relating to human life deducted in the contract, which is appreciable and in any case completely unrelated to the underlying value of the investments in financial instruments.

Edited by: IVASS

See also the term: Insurance-Based Investment Products (IBIPs)

Insurance that falls into the category of Life Insurance Policy but does not have a fixed term: it lasts for the entire life of the insured or until the policy is surrendered. The benefit is paid to the beneficiaries indicated in the policy after the death of the insured or following the surrender, if it has been exercised.

Edited by: IVASS

See also the term: Life Insurance Policy

See also the term: Benefit (insurance)

It indicates the amount of contributions paid (and consequently also the length of the contribution period) that have been credited to the worker throughout his/her working life. It is one of the requirements for obtaining social security benefits together with age, both in the basic pension system and in that of pension funds.

Edited by: COVIP