Financial Institutions

Question 1

Advantages of Bank of England

Answer 1

Responsive for protecting the financial stability of the UK
Sets interest rates at a level designed to enable a stable economy
Lends to banks

Question 2

2 Disadvantages of Bank of England

Answer 2

Can increase interest rates making borrowing more expensive
Not a bank for members of the general public

Question 3

2 Advantages of banks
(Owned by shareholders)

Answer 3

Secure place to store money
Advice for individuals and businesses
Offer a range of services

Question 4

2 Disadvantages of banks
(Owned by shareholders)

Answer 4

Savings only secure up to £85k
Interest charged on loans and overdrafts can be high

Question 5

2 Advantages of building societies
(Owned by members)

Answer 5

Secure place to store money
Better interest rates than banks

Question 6

2 Disadvantages of building societies
(Owned by members)

Answer 6

Savings only secure up to £85k
Fewer branches leading to less customers able to access them

Question 7

2 Advantages of credit unions
(Owned by members)

Answer 7

Secure place to store money
Not for profit organisation, allowing them to offer higher interest on savings

Question 8

2 Disadvantages of credit unions
(Owned by members)

Answer 8

Savings only protected up to £85k
Often smaller loans

Question 9

2 Advantages of National Savings and Investments
(Sells savings and investment products e.g. premium bonds, ISAs)

Answer 9

Government backed, so savings and investments are secure
Easy access at high street post offices for some services

Question 10

1 Disadvantage of National Savings and Investments
(Sells savings and investment products e.g. premium bonds, ISAs)

Answer 10

No interest payments on premium bonds

Question 11

1 advantage of Insurance companies

Answer 11

Offer policies which compensate policyholders against personal injury

Question 12

1 disadvantage of insurance companies

Answer 12

Policy holders may receive lower returns due to the performance of investments

Question 13

1 disadvantage of pension companies
(Pro=employer contributions)

Answer 13

Penalties if funds are taken out early

Question 14

1 advantage of pawnbrokers

Answer 14

Instant cash available if asset has value

Question 15

2 Disadvantages of pawnbrokers

Answer 15

Interest charged on loans
Unable to repay the loan will result in pawned item being sold to recover the debt

Question 16

1 Advantages of payday loans

Answer 16

Immediate cash available

Question 17

1 disadvantages of payday loans

Answer 17

High interest rates

Question 18

1 disadvantage of banks, building societies, credit unions

Answer 18

Savings only protected up to £85k