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Finance > Topic 3: The Impact of External Factors > Flashcards

Topic 3: The Impact of External Factors Flashcards

1
Q

What is regulation?

A

A political factor that sets the rules for financial providers to follow

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2
Q

When was the present regulatory systems established and what act under?

A

April 2013 under financial services act of 2012

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3
Q

What 3 bodies replaced the FSA

A

FPC, FCA and PRA

financial policy committee, financial conduct authority and prudential regulation authority

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4
Q

What do the FPC, FCA and PRA do?

A 
FPC = part of BoE which focuses on risk to whole financial system
FCA = organisation that regulates financial firms providing products to consumers
PRA = main regulator of financial services and sets standards
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5
Q

What is mis-selling with an example

A

When a providers is neglectful in selling an unsuitable product
misspelling of PPI prime example

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6
Q

What 3 services protect consumers and what is their purpose

A

Financial Ombudsman Service = independent party set by parliament that settles consumer complaints
Financial services compensation scheme = covers consumers certain amount if provider defaults
Competition and markets authority = body responsible for promoting competition in market

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7
Q

What is social exclusion

A

If someone is denied access to benefits for reasons such as racism poverty etc.

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8
Q

What is financial exclusion

A

the inability to access even the most basic of financial products

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9
Q

How did the government try to combat exclusion

A

Created Universal banking policy therefore providers had to offer basic accounts
however in 2010 1.75 million still without account

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10
Q

What is information failure

A

When a consumer is not fully informed about a product

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11
Q

What is the cost of compliance

A

Government regulation and pressure could lead to increased prices and loss of jobs
need to ensure regulation is balanced

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12
Q

What are interest rates

A

the price of saving or borrowing with a provider expressed as a percentage

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13
Q

Why did the Monetary Policy Committee change the interest rates in 08 and 2016

A

They cut it to 0.5 in 08 due to the crisis and to 0.25 in 2016 after brexit

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14
Q

When did the government give the BoE power to set rates

A

May 1997

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15
Q

What is target inflation rate

A

2%

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16
Q

What is the trend between share prices and interest rates

A

When rates rise, companies spend less and therefore share prices fall

17
Q

What is equity

A

The difference between market price of property and outstanding mortgage balance

18
Q

What is an equity loan

What is negative equity

A

Equity loan - loan secured on mortgage property

Negative equity - The mortgage loan is greater then property value

19
Q

What are marginal borrowers

How many mortgage repossessions were there in 09 and 15

A

Marginal borrowers are people that are only just managing to repay mortgage
09- 49800, 15 -10500

20
Q

What are the four factors that fuel economic activity in the UK

A
  1. consumer demand
  2. Corporate demand
  3. Government spending
  4. Demand for exports
21
Q

What is Monetary policy

A

the manipulation of interest rates to keep inflation low

22
Q

Fiscal policy

A

How the government manages its overall spending and raising of money

23
Q

What is austerity policy

A

cuts in public spending to reduce government need for borrowing

24
Q

Explain the results of the 2010 election and how it impacted the economy

A

Coalition of Conservative and Liberals won, public spending cut with jobs lost
National debt grew from 530 billion in 08 to 1457 billion in 2014

25
Q

How can high unemployment affect an individual

A

People will reduce consumer lifestyle avoid risky investments and invest in protection and security

26
Q

what are 4 products consumers need providers to supply for global economy

A
  1. foreign exchange services
  2. buy-back guarantees
  3. accepted debt and credit cards
  4. products that manage exchange rates in business
27
Q

Devaluation

A

A deliberate decrease in value of currency to boost exports

28
Q

What is multiculturalism

A

taking account the needs of different cultures ethnic groups that make up society

29
Q

What is sharia law

what are the two Islamic mortgages

A

Sharia law forbids payment and receival of interest in Islam

Ijara and Murabaha

30
Q

Consumer culture

A

where buying and selling of good and services is the most important social and economic activity

31
Q

Demographics

what was UK migration in August 2020

A

statistical data relating to population

313,000

32
Q

what is automation

A

A computer doing a task a person would have done

33
Q

The digital divide

A

technologically illiterate excluded

34
Q

The banking act 2009

A

established regime for dealing with failing banks

35
Q

The financial services act of 2012

A

key act of parliament governing regulation in financial industry

36
Q

what are the 5 legal requirements a company must comply with?

A
  1. company law
  2. employment legislation
  3. tax laws
  4. proceeds of crime and anti-terrorism laws
  5. accounting standards
37
Q

What is deregulation

A

providers allowed to excel from legal restraints to boost compeition

38
Q

Data protection act 2018

A

EU Legislation that applies to UK

39
Q

EU directives

A

requires states to reach target but how they do it is optional

Finance (8 decks)

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