5

Question 1

Bank rate

Answer 1

The interest rate that the Bank of England uses when it lends money to
other banks. Financial services providers take account of the Bank rate
when they decide how to set interest rates on their own products

Question 2

Banking Act 2009

Answer 2

This Act provides a set of tools to allow the regulatory authorities to resolve
(ie wind up) a bank or building society that is in financial difficulty in an
orderly way, and so to reduce the impact of a bank failure on financial
stability and bank customers

Question 3

Challenger banks

Answer 3

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

Question 4

Consumer protection

Answer 4

Designing products and services with customers’ needs in mind, rather
than making maximum profits the absolute priority. It also involves
ensuring that customers are not sold products that are unsuitable for them,
and that they are treated fairly

Question 5

Coronavirus

Answer 5

Coronavirus disease, known as Covid-19, is a respiratory illness that causes
mild to moderate symptoms in a majority of cases but proves debilitating
or fatal for a significant minority. It caused a global pandemic with wide-
ranging economic effects.

Question 6

Corporate social
responsibility (CSR

Answer 6

Any action 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.

Question 7

Deleveraging

Answer 7

Reducing the amount of debt in relation to assets. In personal terms, this
might mean paying off loans, credit cards, etc

Question 8

Digital exclusion

Answer 8

An aspect of financial exclusion – the inability to take part in the computer-
based society

Question 9

Financial exclusion

Answer 9

The inability to get access to even the most basic financial services and
products

Question 10

Financial inclusion

Answer 10

The delivery of financial services at affordable cost to all sections of society,
including the most disadvantaged

Question 11

Financial Services
(Banking Reform) Act
2013

Answer 11

Legislation that introduced retail ring-fencing for banks and the cap on
payday lenders.

Question 12

Financial Services
Act 2010

Answer 12

Legislation that focuses on the need for banks to have a plan in place to
deal with situations where they get into financial difficulty

Question 13

Financial Services
Act 2012

Answer 13

The main Act of Parliament governing the regulation of the financial
services industry

Question 14

FTSE 100

Answer 14

The Financial Times Stock Exchange Index, known as the ‘footsie’. It is an
index of the share price of the 100 companies with the highest ‘market
capitalisation’ (total value of issued shares) listed on the London Stock
Exchange.

Question 15

General Data
Protection
Regulation

Answer 15

European Union legislation implemented on 25 May 2018. In the UK, its
provisions supersede those of the Data Protection Act 1998 with the
creation of the Data Protection Act 2018.

Question 16

Help to Buy scheme

Answer 16

A government-backed initiative set up to help home-hunters purchase a
property with as little as a 5% deposit.

Question 17

Loan forbearance

Answer 17

When a lender does not seek to repossess a property as soon as the
borrower misses a few monthly payments, instead allowing the customer to
stop paying or make reduced payments for a set period

Question 18

Money laundering

Answer 18

The process of making ‘dirty’ money (money gained from criminal
activities) ‘clean’ – ie making it look as though it has been acquired
legitimately

Question 19

Mortgage equity
withdrawal

Answer 19

Additional borrowing based on the difference between the value of a house
and the outstanding mortgage (ie if the house is valued at more than the
amount the owner has to repay on the mortgage)

Question 20

National Employment
Savings Trust (NEST

Answer 20

A pension scheme run by a public organisation, which aims to ensure that
the majority of workers are enrolled in an occupational pension

Question 21

PESTEL analysis

Answer 21

A tool used to analyse how six key areas (Political, Economic, Social,
Technological, Environmental and Legal) in the external environment might
affect individual and corporate financial decisions.

Question 22

Profit margin

Answer 22

The amount by which income from sales exceeds costs