1 Flashcards
Competition and
Markets Authority
(CMA
The body responsible for strengthening business competition and
preventing and reducing anti-competitive activities
Counterparties
People and organisations (eg companies) who lend money to and borrow
from financial intermediaries (ie financial institutions such as banks)
Credit union
A mutual organization (that is, owned by its members) that provides a
range of financial products to members, eg savings accounts and
personal loans. Members of a credit union must share a common bond,
eg all work for the same employer or all work in the same district
divestment
The process of selling off parts of a company to make it smaller, eg the
Lloyds sell-off that created new TSB branches
Financial Conduct
Authority (FCA
The organisation that regulates financial firms providing services to
consumers, and maintains the integrity of the UK’s financial markets
Financial
intermediary
A financial institution that facilitates the process of lending and
borrowing, by taking deposits from those with a surplus and lending
those funds out to those who need to borrow.
Financial
intermediation
The process of taking in deposits from those with a surplus and lending
those funds out to those who need to borrow (see financial intermediary
Financial
Ombudsman
Service (FOS)
An independent body set up by Parliament that settles customer
complaints about providers at no charge to consumers.
Financial Policy
Committee (FPC)
A part of the Bank of England that monitors and responds to risk posed to
the entire financial services market. Its focus on the whole market makes
it a macro-prudential authority
Financial Services
Compensation
Scheme (FSCS)
A compensation scheme that pays compensation to account holders of up
to a certain amount per provider if the provider goes into default (so
cannot pay account holders the money they have in their accounts)
Friendly society
A mutual organisation that offers its members a wide range of financial
products, which can include savings, investments, insurance, pensions
and annuities.
HM Treasury
Her Majesty’s (HM) Treasury, the government department responsible for
development and implementation of financial and economic policy.
Independent
financial adviser
(IFA)
A professional who makes financial recommendations to clients, based on
products offered by a wide range of providers.
Investment banks
Banks that raise funds on the financial markets, rather than accepting
deposits as a retail bank does. They use these funds to provide special
services to large corporations and to governments. Also known as
wholesale banks
Lloyds insurance market
An insurance marketplace where members (corporations and individuals)
employ underwriters to come together and accept insurance risk, dividing
it out between the members
Long-term capital
markets
Financial markets where long-term debt (ie bonds) and shares in the bank
(equity) are bought and sold. This provides a source of funding for banks
monetary policy
The manipulation of interest rates to maintain low inflation
Monetary Policy
Committee (MPC)
The Bank of England committee responsible for keeping inflation under
control by the manipulation of interest rates.
mutual oirganisation
An organisation owned by its customers, who are also its members, rather
than by shareholders
Oligopoly
A market dominated by a few large firms, eg the financial services sector
Payday loan
companies
Online firms that provide instant, very short-term (ie for a few days or
weeks), unsecured cash advances of small amounts to customers who
need cash immediately, and who are in employment and have payroll
records.
Peer-to-peer (P2P)
lenders
Online marketplaces that enable people to lend to and borrow from each
other without using a traditional financial institution such as a bank or
building society
Prudential
Regulation
Authority (PRA)
One of the two main regulators of financial services in the UK (the other is
the Financial Conduct Authority)
Restricted financial
adviser
A professional who can only recommend certain types of product from
one or a limited number of providers. They are not allowed to use the
word ‘independent’ to describe their advice
Retail banks
Banks that deal directly with consumers, eg providing current accounts
and mortgages.
Retail ring-fencing
Separating the deposit-taking part of a bank or building society from the
rest of its business so that, in the event of financial difficulties, the ring-
fenced deposits of retail customers cannot be used to pay the debts of
the more risky investment section of the bank
