Unit 2 Topic 8

Question 1

What is this definition referring to?
An account linked to a particular charity or good cause. The provider makes a cash payment, from its own funds, to this charity or cause based on the average balances held in the affinity group accounts. The more supporters save in their chosen scheme, the bigger the cash payment the charity will receive.

Answer 1

An affinity savings account

Question 2

What is this definition referring to?
Any actions or project in which a company goes beyond the interests of its shareholders and senior management in order to benefit other stakeholder groups, normally with either a social or an environmental purpose. Also known as citizenship or sustainable responsible business.

Answer 2

Corporate social Responsibility (CSR)

Question 3

Economic sustainability

Answer 3

Concerned with reducing the undesirable consequences of economic activity by maintaining consumption on a sustainable scale

Question 4

Environmental sustainability

Answer 4

Concerned with reducing the negative human impact on the earth’s ecosystems

Question 5

Ethical investing

Answer 5

When someone chooses to save in a way that means the money will be used for what the individual seems a good purpose

Question 6

What is this definition describing?
An organisation that brings together and gives support to financial advisers who want to promote green (environmentally friendly) and ethical investment.

Answer 6

Ethical Investment Association (EIA)

Question 7

What is Islamic banking?

Answer 7

Banking based on the principle that a person should not enjoy an increase in wealth from allowing someone else to use their money unless the first person is prepared to expose their wealth to the risk of loss.

Question 8

What is a long-term bond?

Answer 8

A bond that mature after more than 15 years, paying higher interest than a short-term bond but with greater risk

Question 9

Malpractice

Answer 9

Breaking professional rules to gain an advantage, usually at the expense of a customer

Question 10

What type of bond is this definition referring to?
An investment with a maturity of 3-5 years that offers high income but no protection against loss of the capital invested.

Answer 10

Precipice bond

Question 11

Social sustainability

Answer 11

Concerned with creating communities that foster well-being, peace, security and justice for the people who live in them

Question 12

What is this definition referring to?
An FCA initiative that requires providers to put the well-being of customers at the heart of their approach to business.

Answer 12

Treating customers fairly (TCF)

Question 13

Name 5 features of information and advice

Answer 13

Accurate
Up to date
Transparent
Timely
Sufficient but not too complex

Question 14

Name as many factors as possible that influence financial choices (there are 6 on here)

Answer 14

The original want or aspiration
Feasibility of access to a financial product to fulfil the want or aspiration
Information sources
Personality
Price and product features
Reputation of the provider

Question 15

What does the FCA do? Who do they work with?

Answer 15

Protects consumers, keeps the industry stable and promotes healthy competition between FSPs

Works with HM treasury

Question 16

What does the PRA do?

Answer 16

Responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms.

Sets standards and supervised financial institutions at the level of the individual firm.

Question 17

Give an example of poor practice towards customers

Answer 17

Exaggerated + unrealistic claims for products
Conceals information from customers to make a sale
Sells a product clearly unsuited for the needs of the customer
Makes charges out of proportion to the cost of the product

Question 18

Name a stakeholder that may be affected by the actions of a FSP

Answer 18

Customers
Employees
Disadvantaged groups in other countries
Communities within their own country
The environment

Question 19

Name 3 examples of how FSPs get involved in charity work

Answer 19

Making donations
A partnership
Sponsoring fundraising

Question 20

Name 2 ways sustainability can be approached according to the UN

Answer 20

Reducing negative human impact
Reducing undesirable consequences of economic activity

Question 21

What ethical and sustainability issues may people consider when choosing products?

Answer 21

Environmental issues
Social issues
Governance issues