Learning Aim B

Question 1

What is a building society?

Answer 1

Financial institution that handles transactions and stores money for customer - members are part owners and have right to vote/receive info on running of the society.

Question 2

What are the advantages of a building society?

Answer 2

1. Owned by members of
2. Pay interest on savings
3. Safe place to store money

Question 3

What are the disadvantages of a building society?

Answer 3

1. May lack the business drive of commercial banks as banks are profit driven.
2. Savings only protected to £85,000

Question 4

What is a credit union?

Answer 4

Non-profit organisations that handle transactions and stores money on behalf of members - members are owners and have voting rights.

Question 5

What are the advantages of a credit union?

Answer 5

1. Owned by members
2. Offer additional benefits to community and charities.
3. Variety of services

Question 6

What are the disadvantages of a credit union?

Answer 6

1. May lack business drive of commercial banks as banks are profit driven.
2. Savings only protected to £85,000

Question 7

What are pawnbrokers?

Answer 7

Businesses that loan money against security of personal asset - if item not
bought back after specific period then it will be sold on.

Question 8

What are the advantages of pawnbrokers?

Answer 8

1. Quick way of acquiring short term cash
2. Interest not charged
3. Buy back pawned asset

Question 9

What are the disadvantages of pawnbrokers?

Answer 9

1. Amount given for asset is much lower than it’s worth.
2. Asset will be sold if loan is not repaid.

Question 10

What are insurance companies?

Answer 10

Companies that protect against risk of loss in return for a premium - they are profit making organisations.

Question 11

What are the advantages of insurance companies?

Answer 11

1. Protect against unexpected losses/events.
2. Cover available on variety of things
3. Pay monthly so easier to budget

Question 12

What are the disadvantages of insurance companies?

Answer 12

1. Premiums assessed on risk so higher risk equals higher premium.
2. Owned by shareholders therefore need to make a profit.

Question 13

What are some of the methods
Of communication a company can use to communicate with customers?

Answer 13

1. Branch
2. Online
3. Telephone
4. Postal
5. Mobile

Question 14

What are the advantages of visiting a branch?

Answer 14

1. Trust and security
2. Personalised customer services
3. Encourages loyalty

Question 15

What are the disadvantages of visiting a branch?

Answer 15

1. Restricted to bank opening hours
2. Time consuming

Question 16

What are the advantages of online communication?

Answer 16

1. Available for customers 24/7
2. Quick and convenient
3. Private

Question 17

What are the disadvantages of online communication?

Answer 17

1. Not suitable for cash withdrawals
2. Increased risk due to cybercrime

Question 18

What are the advantages of communicating by telephone?

Answer 18

1. No additional charges
2. Convenient
3. Available 24/7

Question 19

What are the disadvantages of communicating by telephone?

Answer 19

1. Higher risk of fraud and identity theft
2. Limited availability
3. Frustrates customers

Question 20

What are the advantages of communicating by mobile?

Answer 20

1. Simple and secure
2. Convenient as easily accessible for customers.

Question 21

What are the disadvantages of communicating by mobile?

Answer 21

1. Not as secure as other methods
2. Dependency on internet connection

Question 22

What are the advantages of communicating by post?

Answer 22

1. Traditional method customers are comfortable with.
2. Does not require additional technology or devices.

Question 23

What are the disadvantages of communicating by post?

Answer 23

1. Limited services
2. Loss or damage of mail
3. Time consuming

Question 24

What is the financial conduct authority?

Answer 24

A financial regulatory body which operates separately from the UK government.

Question 25

What is the role of the financial conduct authority?

Answer 25

Protects customers against firms/individuals that are not authorised.

Question 26

What is the financial ombudsmen service?

Answer 26

Settles complaints between consumers and businesses that provide financial services.

Question 27

What is the financial services compensation scheme?

Answer 27

Protects consumers when financial firms fail - protects savers up to £85,000.

Question 28

What is the role of the financial services compensation scheme?

Answer 28

Pay compensation to consumers if a firm is unable to.

Question 29

What is citizens advice?

Answer 29

A charity run organisation that provides free advice on financial and other issues - can be face-to-face, telephone, or online.

Question 30

What are the advantages of citizens advice?

Answer 30

1. Independent and totally impartial 2. Gives advice to consumers

Question 31

What are the disadvantages of citizens advice?

Answer 31

1. Don’t make distributions to creditors 2. advice only as good as their advisers - not experts usually.

Question 32

What is an individual financial advisor (IFA)?

Answer 32

Professional who provides independent advice and guidance on things like mortgages, pensions, insurance, and investing - qualified and regulated by government.

Question 33

What are the advantages of an independent financial advisor?

Answer 33

1. A personalised relationship 2. Advice that is tailored 3. No commission

Question 34

What are the disadvantages of an independent financial advisor?

Answer 34

1. May be costly 2. Experience levels and quality can vary widely.

Question 35

What is a price comparison website?

Answer 35

Compare the price of goods and services from a range of companies.

Question 36

What are the advantages of a price comparison website?

Answer 36

1. Convenient and easy to access 2. Money saving 3. Access 24/7

Question 37

What are the disadvantages of a price comparison website?

Answer 37

1. Not all sellers use them 2. There are added charges/fees

Question 38

What are debt councillors?

Answer 38

Professional who offers independent advice - commonly used to help people with debt settlement through education, budgeting etc.

Question 39

What are the advantages of debt councillors?

Answer 39

1. Consolidates debt into one affordable instalment. 2. Cleared credit record 3. Regulated by FCA and FOS

Question 40

What are the disadvantages of debt councillors?

Answer 40

1. Debts may take longer to pay off 2. Not allowed to have more credit whilst undergoing it.

Question 41

What are individual voluntary arrangements (IVA)?

Answer 41

Agreement with creditor to pay off all/part of debt - regular payments made to an insolvency practitioner who divides money between creditors.

Question 42

What are the advantages of individual voluntary arrangements?

Answer 42

1. Affordable monthly payments 2. Creditors will wipe portion of debt 3. Unbiased as advice is independent

Question 43

What are the disadvantages of individual voluntary arrangements?

Answer 43

1. Only unsecured debts can be included in agreement. 2. Recorded on credit record for 6 years