1 - Understand the UK financial Services industry in its European and global context Flashcards
Four functions of financial services
- Savings are protected and then into capital management
- A means for savers to access capital which match borrower requirements for long term funds
- Allow individuals and firms insure against risk with assumption of compensation
- Allow investors to diversify portfolios
Who do building socities owned by
The individuals who share accounts with them
Who are banks owned by
Shareholders
What do banks do with money that it receives in current account
Use it to make a return for itself. Eg lending it and charging interest
What is the main purpose of a gilt?
Function as a loan to government
Two objectives of capital markets
- Enable investors to invest in assets that provide potential for real growth
- Help firms raise moeny without borrowing from bank
Two different types of financial instruments
- Shares
- Fixed interest stocks (bonds)
What does financial infrastructure consist of?
- Payment
- Settlement
- Clearing and trading systems
Who is PSR
Payment system regulator
Who provides infrastructure of clearing and settlements of securities and derivatives market
Clearing houses and settlement systems
What is it called when a building society turn into a bank
Demutualisation
Indirect services offered by banks and building societies
- Portfolio management
- Stockbroking services
- Collective investment services
- Insurance and pensions
Core services offered by banks and building societies
- Current acc
- Deposit acc
- Mortgages and loans
Friendly societies
Established in 19th century as mutual self-help groups with no shareholder taking profits, thus all profits would be repayable to society’s members. They are tax exempt as they were “self-help”, however legislation has restricted size of contracts offered
Multi-distribution organisations
Marketing of Financial services becomes easier once you are established. See Sainsbury’s, Tesco and M&S.
Due to introduction of government approval of products within charges, access and terms(CAT)
