Topic 4 Flashcards

Question

How does radio contribute to financial journalism?

Answer 1

A: Many radio channels mix music with news reports. Examples include: • BBC Radio 1 & Classic FM – Primarily music-focused with news updates. • BBC Radio 4 – A factual news network that provides downloadable content

Answer 2

A: BBC Radio 4 airs Money Box, which provides advice on personal finance topics and helps listeners understand potential financial issues related to certain products

Answer 3

• Text versions of news stories • Audio and video clips • Additional downloads such as podcasts

Answer 4

A: Blogs vary in style, approach, and reliability. Some are written by academics with well-supported arguments, while others are opinion-based pieces by individuals. Some blogs express extreme views and are less known

Answer 5

A: Blogs allow readers to respond and engage in discussions with both bloggers and other followers, creating an interactive financial discourse

Answer 6

A: Social media provides a platform for sharing opinions and discussing financial concerns. Many people and financial institutions actively engage on social media

Answer 7

A: More than 90 financial services firms used platforms like Twitter and Facebook for recruitment, customer service, and PR purposes (Taylor, 2012)

Answer 8

A: • Twitter: 43% • Facebook: 28% • LinkedIn: 18% • Instagram: 11%

Answer 9

is a specialist body set up to research and report on issues within a chosen area. They can be government-funded, politically affiliated, or run by pressure groups and charities

Answer 10

A: It aims to improve living standards for low-to-middle-income UK households through research and policy development. It is funded by the Resolution Trust and supported by the Barrow Cadbury Trust

Answer 11

A: Their report, Maxed out: Serious personal debt in Britain, found that: • The average UK household debt was £54,000, nearly double what it was ten years earlier. • The poorest 10% of UK households had debts four times their annual income. • Monthly debt repayments were nearly half of their gross income

Answer 12

A: The Centre supports digital technologies like apps and programs to help financially excluded individuals

Answer 13

A: The media informs the public and sparks debate. Financial services providers actively monitor media reports due to their influence, employing PR teams to manage negative publicity

Answer 14

A: Negative media coverage can damage their reputation. If firms need to defend themselves, it indicates the media is doing its job in holding them accountable

Answer 15

A: Different media outlets report the same story in different ways, shaping public perception. Media bias occurs when reports reflect political or commercial agendas rather than presenting neutral facts

Answer 16

A: Some media deliberately aim to influence opinions, so readers should use critical thinking to identify misleading or one-sided reporting

Answer 17

reflects the journalist’s or media outlet’s viewpoint, aiming to persuade readers rather than present a balanced argument.

Answer 18

A: Financial blogs vary in style, approach, and reliability. Some are academic with supported views, while others are opinion-based by individuals. Some may express extreme views

Answer 19

A: It allows interaction; readers can respond to views, creating discussions

Answer 20

A: For recruitment, customer service, and PR purposes

Answer 21

A: Twitter (43%), followed by Facebook (28%), LinkedIn (18%), and Instagram (11%).

Answer 22

A: It warned that rising interest rates could push millions into ‘perilous debt,’ where over half of income is spent on debt repayments

Answer 23

: The average UK household debt was £54,000—almost twice the level from ten years prior. The poorest 10% had debts equal to four times their annual income

Answer 24

A: The poorest in the UK were cut off from mainstream banking, worsening financial exclusion

Answer 25

A: The way a news story is reported influences perceptions. Bias occurs when news is reported in a misleading, one-sided, or incomplete manner

Answer 26

A: - Subjective reports aim to persuade and present only one side. • Objective reports present both sides and conclude with a balanced view

Answer 27

A: They choose which facts to present and which to omit, often favoring their preferred narrative

Answer 28

A: A journalist may quote a person agreeing with their viewpoint while ignoring opposing views

Answer 29

A: To align with the values and political beliefs of their audience, increase readership, or serve an agenda

Answer 30

A: - Use of “we” and “us” to imply universal agreement. • Spinning negative stories to favor a particular political party or company. • Race and gender bias in reporting. • Using selective expert opinions to promote one side. • Presenting industry-funded reports without disclosing conflicts of interest. • Focusing heavily on certain financial issues while ignoring others. • Omission of stories that do not align with the media outlet’s agenda

Answer 31

A: The report highlighted British Gas raising prices by 6% but emphasized that its profit margins were low to minimize negative perceptions

Answer 32

A: To get a balanced perspective and avoid falling for one-sided or misleading reporting

Answer 33

A: Financial services are complex by nature, and many consumers lack the financial knowledge to understand terms and conditions of products like mortgages and pensions. Companies like banks and insurance providers often add complications to differentiate their brands, which makes choosing even simple products (e.g., current accounts, personal loans) difficult for consumers.

Answer 34

A: Banks have unique balance sheets and compliance rules. The financial system is a complex network of interconnected trades happening daily, governed by specialized rules and sophisticated securities. Most people struggle to understand that a significant portion of money in circulation has no physical presence and is created when banks provide loans

Answer 35

A: The media often simplifies complex financial events to make them comprehensible, sometimes omitting essential context. This can lead to exaggerated conclusions that seem credible and shocking, influencing public perception negatively

Answer 36

A: Banks were criticized for borrowing money from depositors for short periods and lending it to borrowers for longer periods. Though this is a normal practice, the media labeled it “reckless” without providing proper context. This led to a trend of “bashing the banks,” affecting their reputation and even impacting junior staff

Answer 37

A: Media oversimplification and negative reporting eroded public confidence. While banks engaged in some bad practices, the lack of balanced reporting worsened the situation. Financial providers later struggled to rebuild trust and had to use media to restore customer relationships

Answer 38

A: Media doesn’t just report but actively shapes opinions, expectations, and behaviors. By promoting existing practices and reinforcing trends, they impact the sustainability of financial services and the overall financial system

Answer 39

A: Media promoted a consumer culture that encouraged borrowing for luxury lifestyles—like owning homes, buying cars, and going on foreign holidays. Advertisements and TV shows glamorized high-spending lifestyles, while commercial channels promoted credit products, making it seem normal to finance these ‘wants’ with debt

Answer 40

A: Borrowing for non-essential luxuries is unsustainable, but media portrayal made it seem normal and desirable. Seeing celebrities living lavishly and frequent advertisements promoting easy credit created social pressure, making unsustainable borrowing patterns seem acceptable

Answer 41

A: The media provided extensive coverage, ranging from immediate “breaking news” reports to deeper analyses discussing the causes, implications, and predictions about the crisis’s outcomes. Although the initial triggers of the crisis were independent of the media, the way news was reported influenced its development

Answer 42

A: The collapse of Northern Rock was a significant event. Media coverage, including images of long customer queues withdrawing money, was criticized for fueling panic and accelerating the bank’s downfall. Critics argued that such reporting undermined public confidence, worsening the situation

Answer 43

A: Critics claimed that the BBC, particularly journalist Robert Peston, contributed to public panic by reporting on the crisis, which led people to rush to withdraw their savings. However, the BBC defended its actions, arguing that it was fulfilling its public duty to inform people, who might have panicked regardless

Answer 44

A: In a 24-hour news cycle with instant television and internet access, news spreads quickly. Journalists, driven by the need for exclusive stories, can unintentionally amplify crises. This makes it challenging for financial providers to manage information and prevent misinformation

Answer 45

A: Positively, media can keep consumers better informed, encouraging them to demand improved services, thus promoting sustainability. Negatively, rapid or incorrect reporting can spread panic and harm confidence in financial institutions, which threatens sustainability

Answer 46

A: While the media is a crucial part of society, providing valuable information, it must report responsibly. Inaccurate or exaggerated reporting can threaten financial sustainability by fostering unnecessary panic

Answer 47

A: Quick dissemination of information can be beneficial by informing consumers. However, if the information is partial or incorrect, it can lead to rapid loss of confidence and harm the long-term sustainability of financial services

Answer 48

Answer: • Banks were accused of irresponsible lending and malpractice before the financial crisis. • Many financial scandals have since come to light, with banks being fined for unethical practices. • New cases of malpractice continue to emerge. • The financial sector has struggled to rebuild its reputation

Answer 49

Answer: • Banks lent money too easily and too cheaply to people who could not afford repayments. • Heavy spending on marketing loans encouraged excessive borrowing. • Relationship management teams focused on sales targets instead of customer welfare

Answer 50

Answer: • Increased demand for goods and services, especially property, led to rising house prices. • When interest rates rose, many borrowers defaulted on their loans. • The market crashed, leading to economic turmoil. • Banks developed a reputation for aggressive selling tactics rather than prioritizing customer interests

Answer 51

Answer: • Banks have worked to restore their reputation by changing policies and practices. • They have faced fines and legal consequences for past malpractice. • The financial sector continues to be scrutinized for ethical banking practices.

Answer 52

Answer: • PPI was designed to protect borrowers by covering debt payments in case of unemployment or illness. • It was often mis-sold to customers who did not need it or were ineligible. • Some banks pressured customers to purchase PPI by falsely claiming loans would not be granted without it

Answer 53

Answer: • The scandal received heavy media attention, leading to widespread public awareness. • The financial sector faced huge embarrassment. • Banks were forced to compensate affected customers. • The total cost to banks reached nearly £40 billion in compensation (FCA, 2021)

Answer 54

Answer: • Banks manipulated the London Interbank Offered Rate (Libor), which is the interest rate banks charge when borrowing from each other. • Traders in banks’ trading departments falsified information to push Libor rates up or down to benefit their own trades. • This practice, known as market rigging, is illegal and led to fines for banks involved. • Libor is being replaced by Sonia (Sterling Overnight Index Average) due to this scandal

Answer 55

Answer: • Further damaged public trust in banks. • Manipulated rates allowed banks to borrow money more cheaply, but pension funds and other institutions suffered financial losses due to lower returns. • Millions of people were financially impacted. • Regulators imposed fines, but lawsuits for compensation could cost even more

Answer 56

Answer: • Banks have experienced computer system failures, money laundering failures, and non-compliance with regulations. • Examples: • RBS (Royal Bank of Scotland) faced a major computer error on Cyber Monday 2013, affecting customers using credit and debit cards. • A June 2012 glitch left 13 million customers of RBS, NatWest, and Ulster Bank unable to access their money. • In 2015, HSBC suffered a similar major banking failure

Answer 57

Answer: • Customers were unable to use their bank accounts, causing inconvenience and financial stress. • Public trust in banks declined further due to repeated failures. • There were calls for banks to improve their technology to prevent future issues. • The incidents highlighted banks’ lack of investment in sustainable, secure systems

Answer 58

Answer: • Some reports exaggerate banking failures, but the exposure raises awareness of unethical banking practices. • Scandals force banks to be held accountable for poor behavior. • Public pressure may encourage banks to act more prudently and invest in reliable systems

Answer 59

Answer: • Many newspapers have specialist sections covering financial issues. • The media takes on the role of the “voice of the people” against big businesses. • Investigative journalism helps expose unethical financial practices (e.g., mis-selling of PPI). • Current concerns include the rise of Buy Now Pay Later (BNPL) services, which many consumers do not recognize as debt

Answer 60

Answer: • Media champions consumer rights by exposing unethical business practices. • Scandals drive traffic to news outlets, making it commercially beneficial for media to report on them. • The media is in a strong position to influence public perception and put pressure on financial institutions. • U.S. research shows that people increasingly see the media as a financial watchdog

Answer 61

Answer: • The financial trade press often takes a defensive stance, protecting businesses. • It primarily quotes industry leaders who aim to protect their own interests. • General media, in contrast, tends to side with consumers, exposing unethical practices

Answer 62

Answer: • Over time, the percentage of people who believe the press: • “Keeps leaders from doing things that should not be done” has declined but remains significant. • “Gets facts straight” has fluctuated, showing some trust issues. • “Is independent” and “Is fair to all sides” has declined significantly, indicating skepticism

Answer 63

Answer: • Teaser rates refer to temporary higher interest rates offered on savings accounts to attract new customers. • These rates last for a limited period (e.g., six months or a year) before reverting to a much lower standard rate. • Example: A ‘Basic Saver’ account might offer 0.3% for the first year (including a 0.1% introductory bonus), then drop to 0.2% after the bonus expires

Answer 64

Answer: • Many customers do not realize the initial interest rate is temporary. • Terms and conditions are often in small print and not clearly explained. • Customers may become angry when they later discover they are earning less interest than expected. • This practice has led to calls for better transparency in banking

Answer 65

Answer: • Media reports classify introductory bonus rates as “teaser rates.” • Reports acknowledge that offering bonus rates is legal, but argue that banks should: • Notify customers before the bonus period ends. • Give customers a chance to switch accounts if they wish. • Public pressure from media exposure has forced banks to change practices

Answer 66

Answer: • In 2014, RBS and NatWest stopped offering teaser rates to regain customer trust. • This decision was influenced by negative media coverage and consumer dissatisfaction. • The banking industry has faced greater scrutiny regarding transparency in savings products

Answer 67

Answer: • Brings bad practices to public attention, pressuring providers to change. • Alerts financial regulators to the need for tighter consumer protection rules. • Helps individual consumers and small businesses challenge powerful financial institutions. • Provides the public with clear, accessible financial information, improving transparency in banking

Answer 68

Subjectively

Answer 69

Daily mail

Answer 70

A financial magazine

Answer 71

Omission bias

Answer 72

Financial Times