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Question 1

Bad competition

Answer 1

Where there is a small number of large, powerful providers on the market that only aim to maximise their sales, which may result in
mis-selling and a lack of differentiation in products

Question 2

Barriers to entry

Answer 2

The features of the market that make it difficult for new firms to
enter and compete

Question 3

Barriers to expansion

Answer 3

The features of the market that make it difficult for new firms to
grow.

Question 4

Challenger banks

Answer 4

Any new bank that challenges the ‘big four’. For example, Virgin
Money, Metro Bank, Monzo Bank and Starling Bank.

Question 5

Competition

Answer 5

The number and size of sellers supplying products to a particular
market

Question 6

Competition and
Markets Authority
(CMA

Answer 6

The body responsible for strengthening business competition and
preventing and reducing anti-competitive activities

Question 7

Competitive marke

Answer 7

A market where there is a large number of sellers and where no one
of these is so big that it can dominate the market.

Question 8

Concentration ratio

Answer 8

The percentage of a particular market accounted for by a certain
number of firms

Question 9

Customer inertia

Answer 9

The idea that customers are reluctant to change their financial
services provider and therefore tend not to challenge poor service.

Question 10

Effective competition

Answer 10

When the providers on the market compete to provide the best
product, rather than taking advantage of lack of customer awareness
or poor regulation

Question 11

Financial Conduct
Authority (FCA)

Answer 11

The organisation that regulates financial firms providing services to
consumers, and maintains the integrity of the UK’s financial markets

Question 12

Genuine competition

Answer 12

Where there are several providers, who are independent of each
other, that design a range of clearly differentiated products for
consumers to choose from

Question 13

Good competition

Answer 13

Where there are a good number of providers on the market so that
consumers have a variety of firms to choose from

Question 14

Market share

Answer 14

The sales that a company makes as a proportion of the total market
for the products and services it provides, or the sales of a specific
product as a proportion of the total market for that product

Question 15

Oligopoly

Answer 15

A market dominated by a few large firms, eg the financial services
sector

Question 16

Payment protection
insurance (PPI

Answer 16

An insurance product intended to ensure repayment of loans should
a borrower face unexpected events that prevent them from repaying
the debt.

Question 17

Pressure group

Answer 17

A group who act together to try to bring about change. In the case of
financial services, they try to pressure financial services providers
into making changes to the way they develop, market and deliver
their products.

Question 18

Product complexity

Answer 18

The idea that financial services products can be too complicated for
consumers to understand

Question 19

Transparency

Answer 19

When customers are given full information on the products available,
the terms and conditions are clearly explained, and customers
understand what they are buying and the financial implications
involved.

Question 20

Wasteful competition

Answer 20

Where providers spend huge amounts of money on designing,
branding and marketing a product that is only slightly different from
those of its competitors