Consumer Protection Flashcards
Competition and Markets Authority (CMA)
An independent, non-ministerial government department, which works to promote competition between providers so that customers benefit.
Consumer credit
This is another term used for borrowing. It is important to understand that ‘taking credit’ or ‘buying on credit’ refers to borrowing. However, a credit into a bank account means paying money in.
Credit union
A mutual organisation (that is, owned by its members) that provides a range of financial products, eg savings accounts and personal loans to members. Members of a credit union must share a common bond, eg all work for the same employer or all
work in the same district.
Current account
Bank or building society accounts where people can store their money in the form of electronic balances and withdraw it to make payments.
Deposit
A sum of money placed by a customer with a bank.
Financial Conduct Authority (FCA)
One of the two main regulators of financial services in the UK (the other is the Prudential Regulation Authority).
Financial Services Compensation Scheme (FSCS)
A compensation scheme that pays compensation to account holders of up to a certain amount per provider if the provider goes into default (in other words cannot pay account holders the money they have in their accounts).
Independent financial adviser (IFA)
A professional who makes financial recommendations to clients, based on available products across a wide range of providers.
Liquidity
The assets that a business holds in the form of cash, that can be used to meet immediate demands for payment. (Many assets cannot be used in this way – for example a company that owns a building or machinery would have to sell them in order to make a payment.)
Overdraft (authorised and unauthorised)
A facility that allows an account holder to withdraw more money than they actually have in their account. An authorised overdraft is agreed with the bank in advance within certain limits. Exceeding those limits or going overdrawn without permission is
an unauthorised overdraft, and attempted withdrawals may not be honoured.
Standards of Lending Practice
A voluntary code of conduct that sets out good practice for the provision of advice about loans, credit cards, charge cards and current account overdrafts. It assures customers that subscribed providers follow the Standards and gives information on the service they should expect.
Treasury
Her Majesty’s (HM) Treasury, the government department responsible for
development and implementation of financial and economic policy.
Investment banks
Banks that are involved in trading financial assets such as shares, underwriting issues of shares by other institutions and advising on mergers and acquisitions. Investment banks do not provide services such as current accounts, etc – these are provided by retail banks.
Office of Fair Trading (OFT)
The government department that monitored how businesses compete with each other. It was abolished in April 2014 and its responsibilities shared between the Financial Conduct Authority and a new organisation, the Competition and Markets Authority.
