(B1) Features of Financial Institutions Flashcards
Financial Institutions
- Bank of England
- Banks
- Building societies
- Credit unions
- National Savings and investments
- Insurance companies
- Pension companies
- Pawnbrokers
- Payday loans.
What is the Bank of England?
The UK’s central bank which is responsible for maintaining the UK’s Economy
What does the Bank of England do?
- Issues legal tender
- Set interest rates
- Regulates banks, companies and credit unions
What are Banks?
A financial institution that takes deposits and hands out loans
Features of a Bank
- Owed by shareholders
- In the event of failure deposits are secured up to £85,000
- Offer customers accounts and loans
What are building societies?
A financial institution owned by their account holders
What is the advantage of building societies?
They offer better interest rates and savings than banks
What is the disadvantage of building societies?
There are fewer branches so they are harder to access
What are credit unions?
A non-profit financial institution owned and run by it’s members
What is the advantage of credit unions?
Offers similar options as a bank but more affordable loans
What is the disadvantage of credit unions?
More limited funds and opportunities than banks and building societies
What is the National Savings and Investments (NSI)?
A government bank that offers savings and investment products e.g. ISAs and premium bonds
What is the advantage of National Savings and Investments?
- Government backed so savings are secured
- Can be accessed from high street post offices
What is the disadvantage of National Savings and Investments?
Poor interest rates
What is the disadvantage of pension companies?
Funds are locked into the savings scheme with penalties if taken out early
