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Business Studies A-Level 🌙 > Learning Aim B > Flashcards

Learning Aim B Flashcards

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1
Q

Financial institutions (9) ?

A

Bank of England
Banks
Building societies
Credit unions
National savings and investments
Insurance companies
Pension companies
Pawnbrokers
Payday loans

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2
Q

Features of the Bank of England?

A

UK’s central bank

Responsibility for maintaining healthy level of financial stability for the UK

Responsibilities include issuing legal tender, setting interest rates, and controlling national debt

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3
Q

Features of banks ?

A

Organisation that handles financial transactions and stores money on behalf of its customers

Services offered include holding deposits, making payments and supplying credit

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4
Q

Features of building societies?

A

Handle financial transactions and store money on behalf of its members

Members are part owners and have the right to vote and receive info on running the society

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5
Q

Features of credit unions ?

A

Not for profit organisation that handle financial transactions and store money on behalf of its members

Often a desire to support a community made up of its members

Members are owners and have a voting right

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6
Q

Features of national savings and investments ?

A

Government backed organisation that offers a secure saving option

Offers range of options including ISAs, premium bonds and bonds and gilts

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7
Q

Features of insurance companies?

A

Businesses that protect against the risk of loss in return for a premium

Profit making organisations

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8
Q

Features of pension companies ?

A

Businesses that sell policies to people allowing them to save for retirement

Normally they’ll invest the money paid to them in order to increase its value.

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9
Q

Features of pawnbrokers ?

A

Businesses or individuals who loan money against the security of a personal asset E.g. jewellery

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10
Q

Features of payday loans ?

A

Organisations that offer a short term source of finance to bridge gap between now and payday

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11
Q

Advantages of the Bank of England ?

A

Set interest rates to achieve stable economy

Lends to banks

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12
Q

Disadvantages of the Bank of England ?

A

Not a bank for members of the general public

Ability to raise interest rates and make borrowing more expensive

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13
Q

Advantages of banks ?

A

Offer range of services and account types

Provide secure place to store money

Pay interest on credit balances for most accounts

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14
Q

Disadvantages of banks ?

A

Savings only protected up to £75,000. Therefore if bank goes bankrupt, this will be lost

Profit making organisation owned by shareholders, therefore costs to individuals may be higher to meet shareholder objectives

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15
Q

Advantages of building societies?

A

Offer range of services and account types

Secure place to store money

Interest paid on credit balances

Owned by members therefore costs can be kept down allowing for higher interest payments

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16
Q

Disadvantages of building societies?

A

Savings only protected up to £75,000. Therefore if bank goes bankrupt, this will be lost

May lack business drive of commercial banks

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17
Q

Advantages of credit unions ?

A

Offer range of accounts and services

Secure place to store money

Owned by members, therefore costs can be kept down

Offer additional benefits to the community or a good cause

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18
Q

Disadvantages of credit unions ?

A

Savings only protected up to £75,000. Therefore if bank goes bankrupt, this will be lost

May lack business drive of commercial banks

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19
Q

Advantages of national savings and investment?

A

Government backed therefore offering security on 100% of savings

Offers additional services and Methods of saving E.g. premium bonds

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20
Q

Disadvantages of national savings and investment ?

A

Rates are variable

Not as easy to access due to lack of high street presence

Often required to give notice on withdrawals

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21
Q

Advantages of insurance companies?

A

Protection against unexpected loss or financial expenses

Easy and regular monthly payments making planning easier

Wide range of services and cover to suit needs of all customers

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22
Q

Disadvantages of insurance companies?

A

Premiums are assessed on estimated degree of risk - may penalise some people too harshly

Profit making organisation therefore premiums will be charged

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23
Q

Advantages of pension companies?

A

Help to plan for financial security after retirement

Deductions can be taken directly from pay

Experts employed to make best investment decisions

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24
Q

Disadvantages of pension companies?

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A

Poor investment decisions may result in a disappointing return

Money already invested can’t be released until agreed policy dates

25
Advantages of pawnbrokers ?
Quick way of acquiring cash Asset can be brought back within set period of time Interest is not charged
26
Disadvantages of pawnbrokers?
Amount given for asset is usually substantially lower than its actual worth If Money is not repaid within agreed time, the asset will be sold on
27
Advantages of payday loans ?
Quick way of acquiring cash for short term
28
Disadvantages of payday loans ?
Interest charges are likely to be very high Often results in paying back a final sim usually much higher than intial amount borrowed
29
Communicating with customers (5) ?
Branch Online banking Telephone banking Mobile banking Postal banking
30
Advantages of communicating with customers through a branch ?
Opportunity to build a relationship, trust and brand loyalty Transactions can be conducted then and there Advice can be offered Gives customer high level of confidence
31
Disadvantages of communicating through a branch ?
Need to travel resulting is potential travel costs Restricted to bank opening hours Time consuming E.g. long queues and travel time
32
Advantages of communicating with customers through online banking ?
Available 24/7 Privacy Convenient
33
Disadvantages of communicating through online banking ?
Takes time to set up or apply Not suitable for cash withdrawals Risk of cyber crime If only an online account, facilities may be limited
34
Advantages of communicating with customers through telephone banking ?
Convenient especially for basic functions E.g. checking a balance No additional charges
35
Disadvantages of communicating through telephone banking?
Full access may be limited to set hours Call centres and automated systems may frustrate customers Higher risk of fraud or identity theft
36
Advantages of communicating with customers through mobile banking?
Convenient Available 24/7 No additional charges
37
Disadvantages of communicating through mobile banking?
May need to download specific apps to access Higher security risk due to increase risk of fraud of theft of mobile Can be prone to hackers sending fake texts
38
Advantages of communicating with customers through postal banking
Traditional method, many customers feel comfortable Doesn’t require technology
39
Disadvantages of communicating through postal banking?
Can be slow due to postal system Post may get lost
40
Consumer protection (5) ?
Financial Conduct Authority (FCA) Financial Ombudsman Service (FOS) Financial Services Compensation Scheme (FSCS) Office of fair trading (OFT) Legislation: consumer credit
41
What is the Financial Conduct Authority (FCA) ?
Independent organisation with a remit to regulate the actions of providers of financial services Funded my membership fees Focus on three areas: authorisation, supervision and enforcement
42
What is the Financial Ombudsman Service (FOS) ?
Organisation appointed by the government to represent the interests of the consumer disputes with financial service providers Funded by compulsory fees charged to financial institutions FOS becomes involved in disputes if they cannot he settled between the consumer and financial service
43
What is the Financial Services Compensation Scheme (FSCS) ?
Organisation in the UK that pay compensation to a consumer of financial services if the service cannot pay Protects all savers in banks and building societies up to £5000 - if the institution goes bankrupt, the savings will be refunded by FSCS
44
What is the Office of Fair Trading (OFT) ?
Government organisation that regulates all markers including financial Aim to encourage health competition between financial institutions
45
What is the Legislation: consumer credit ?
Laws passed by the UK government to enforce regulation of any firm offering credit to consumers
46
Different financial information providers (6) ?
Citizens advice Independent financial advisor (IFA) Price comparison websites Money advice service Debt counsellors Individual voluntary arrangements (IVAs) bankruptcy
47
Advantages of Citizens advice ?
Free service Available face to face and online Wide range of areas covered
48
Disadvantages of citizens advice ?
Trained volunteers- not professionals therefore knowledge may be limited
49
Advantages of independent financial advisor (IFA) ?
Offered by professionals Regulated by the FCA and FOS Advisors will take time to assess situation
50
Disadvantages of independent financial advisors (IFA) ?
Services charged for Advice offered isn’t 100% guaranteed to be unbiased or up to date
51
Advantages of price comparison websites?
Easy to access 24/7 Free service
52
Disadvantages of price comparison websites?
Not guaranteed to be 100% up to date or unbiased Doesn’t always cover all available options- limited
53
Advantages of money advice service ?
Government funded therefore advice is free Covers wide range of financial matters
54
Disadvantages of money advice service ?
Only available online or over the telephone Can take time to find and understand exact advice Advice can be generic rather than personal
55
Advantages of debt counsellors ?
Advice offered is by a professional who specialises in debt management Regulated by FCA and FOS
56
Disadvantages of debt counsellors ?
Services charged for Only focuses on debt management rather than all financial concerns
57
Advantages of individual voluntary arrangements (IVAs) bankruptcy?
Helps manage debt repayment, with regular payments making budgeting easier Independent advice without bias
58
Disadvantages of individual voluntary arrangements (IVAs) bankruptcy?
Set up and handling fees are charged Will affect future credit ratings

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