unit B Flashcards
(29 cards)
What are the 9 types of financial institutions?
-bank of England
-building societies
-credit union
-pawnbrokers
-banks
-insurance companies
-payday loan companies
-national savings and investments
-pension companies
what are the advantages and disadvantages of the bank of England
UKs central bank that supervises UK financial institutions
-keeps economy stable
-regulates banks
-sets interest rates and targets for inflation
-increases in interest rates, increases cost of borrowing
-can set targets to reduce demand in economy to reach inflation targets
-accounts cannot be held with this bank
what are the advantages and disadvantages of building societies
similar to banks but owned by their members
-offers better interest rates than banks
-only £85,000
protection if it fails
-less facilities than banks
-less branches then banks
what are the advantages and disadvantages of credit unions
not for profit small scale institutions that help their local community
-owned by members so low cost
-helps poorer communities
-savings are only protected up to £85,000
-small and have limited funds
what are the advantages and disadvantages of pawnbrokers
lend money to customer and they hold the customers expensive asset, they sell this if the customer does not make all payments/buys their asset back
-quick
-can buy asset back
-pawnbroker undervalues asset
-asset will be sold if all payments are not made
what are the advantages and disadvantages of banks
they take money from savings and give it to lenders. offers a wide range of services
-secure and safe
-earn interest on some saving accounts
-lots of branches
-for profit so will charge for services
-savings only protected up to £85,000
-have to make profits for shareholders
what are the advantages and disadvantages of insurance companies
companies that offer protection against loss and they charge premiums
-protect policyholder against loss
-monthly payments
-peace of mind
-premiums can be expensive
-terms and conditions are complex and they do not always cover the policyholder
what are the advantages and disadvantages of payday loan companies
companies that offer short term loans for people who absolutely need money to get them by until their payday.
-immediate cash
-easy to arrange
-even people with low credit scores can easily get one
-very high interest rates
-often gets the customer deeper into debt
what are the advantages and disadvantages of national savings and investments
sales saving and investment products such as bonds and ISAs. government owned.
-extremely secure as it is government owned
-provides finance for government
-no interest payments on premium bonds
-low interest rates on savings
-only available online
what are the advantages and disadvantages of pension companies
they sell policies to customer that allow them to save for their retirement
-lots of options such as workplace pensions where employer makes contributions
-monthly payments so can be budgeted
-poor investment returns can reduce the pension
-lots of scams and scandals
-penalties for withdrawing pension early
what are 5 types you can communicate with customers
-branch banking
-telephone banking
-online banking
-mobile banking
-postal banking
what are the advantages and disadvantages of branch banking
a physical place where customers can carry out transactions
- confidence
-easy to seek advice
-immediate transactions
-travel costs
-queues
-restricted to opening and closing hours
what are the advantages and disadvantages of telephone banking
bank transactions over the phone
-speak to qualified individual
-services are automated
-may be put on hold
-higher risk of fraud
what are the advantages and disadvantages of online banking
the use of internet to carry out transactions
-24/7
-avoids travel costs
-lots of services available
-risk of cybercrime
-cannot withdraw money
-relies on customer having specific devices and an internet connection
what are the advantages and disadvantages of mobile banking
customers managing their accounts through their mobile device
-quick, easy and convenient
-24/7
-have to download specific apps
-cybercrime/hackers
-device could be stolen
what are the advantages and disadvantages postal banking?
customers sending paper transactions or bank sending statements to customers
-no need for expensive devices
-traditional and suitable for older customers
-slow postal service and could get lost
-risk of identity theft if not stored safely
-becoming less popular as banks are switching ‘paperless’
what are the 5 types of consumer protection?
-FCA
-OFT
-FOS
-FSCS
-Legislation, consumer credit
what is an FCA and what does it do?
Financial Conduct Authority. set to improve financial markets and ensures that customers are being treated fairly
-authorise financial service providers and can ban them
-supervise
-enforce rules to protect consumers
-promote competition and large choice for customers
what is an OFT and what does it do?
Office of Fair Trading. set up by the UK government to ensure that there is a good level of competition and customers interests are upheld.
-make sure businesses decisions do not harm customers interests or reduce competition
-administer legislation
what is an FOS and what does it do?
Financial Ombudsman Service. customers can go to this organisation if they have an unsolved compliant.
-resolves disputes between customers and financial service providers
-listen to both sides
-can award the customer up to £150,000
what is an FSCS and what do they do?
Financial Service Compensation Scheme. set up by the UK government and they will compensate customers if financial service providers fall.
-protect customers savings up to £85,000
-funded by fees charged to financial service providers
-providers must be authorised by FCA
what is legislation consumer credit and what do they do?
the consumer credit act 1974 regulates credit card purchases, loans, and hire purchase agreements
-gives consumers protection when borrowing
-sets guidelines for financial service providers to follow such as information to customers
what are the different types of informational guidance and advice are there?
-IFA
-debt counsellors
-citizens advice
-price comparison websites
-bankruptcy
-IVAs
what are the advantages and disadvantages of IFA
Independent Financial Advisors who are qualified professionals.
-Independent so they can recommend/compare the entire market
-professional/they know what they are talking about
-regulated by FCA
-costs money
-may not always be impartial advice
