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R01 - Financial Services, Regulation and Ethics > Chapter 1B - UK Financial Services Structure > Flashcards

Chapter 1B - UK Financial Services Structure Flashcards

1
Q

What are the four key components of the UK financial sector?

A

Financial Infrastructure
Financial Markets
Financial Firms
The Financial Sector Authorities

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2
Q

Who overseas payment systems in the UK?

A

The Bank of England

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3
Q

Which company is the main service company for providers of payment systems?

A

UK Payments Administration Ltd (UKPA)

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4
Q

What name is given to the economic regulator for the UK payment systems industry?

A

Payment Systems Regulator (PSR)

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5
Q

What is the UK payment systems industry worth?

A

£81 trillion

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6
Q

What are the 3 statutory objectives of the Payment Services Regulator?

A
  • to ensure that payment systems are developed in the interest of all who use them
  • to promote effective competition in the market
  • to promote development and innovation of payment systems, especially the infrastructure used to operate them
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7
Q

Payment Services Regulator payment systems should be:

5 answers

A
  • accessible
  • reliable
  • secure
  • value for money
  • work well for the user
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8
Q

What do clearing houses and settlement systems do?

A

Provide infrastructure for clearing and settlement of securities and derivatives markets.

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9
Q

Who is the regulator for recognised investment exchanges?

A

FCA

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10
Q

Who regulates the recognised clearing houses?

A

Bank of England

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11
Q

What does EMIR stand for?

A

European Market Infrastructure Regulation

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12
Q

What are the two kinds of financial market?

A

On-Exchange and Over-the-Counter (OTC)

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13
Q

Who regulates the key exchanges of the UK financial markets?

A

The FCA

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14
Q

Define “Money Market”

A

A wholesale market for commercial borrowers and lenders

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15
Q

Define “Capital Markets”

A

For trading stocks and shares, fixed interest investments and derivatives (these supply capital for businesses and investments for investors)

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16
Q

Define “Commodity Market”

A

For trading physical goods (oil, steel, food etc.)

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17
Q

Define “Foreign Exchange (FX) Markets”

A

For trading foreign currency

18
Q

Define “Insurance Companies”

A

For insuring physical assets. These provide capital to secure insurance policies and provide banking and investment management

19
Q

Define “Investment Companies”

A

These invest surplus funds for longer term gain

20
Q

Define “Life Assurance and Pension Companies”

A

These invest their assets to meet long-term policyholder obligations

21
Q

Define “Reinsurance Companies”

A

Companies that provide security to diversify risk from insurance companies

22
Q

Define “Investment Houses”

A

These issue pooled investments like unit trusts and open-ended investment companies (OEIC’s)

23
Q

What are the 3 core services offered by banks and building societies?

A

Current Account; Deposit Account; Mortgages and Loans

24
Q

Which is the most flexible sevice offered by banks and building societies?

A

Current Account

25
Q

Which service is offered by banks and building societies to fund the purchase of property?

A

Mortgages and Loans

26
Q

What interest is paid on credit balances in a Current Account?

A

Little to none

27
Q

What name is given to the process of a building society losing its’ mutual status in favour of becoming a public corporation?

A

Demutualisation

28
Q

What indirect services are offered by banks and building societies?

(5 answers)

A
  • Portfolio management
  • Stockbroking services
  • Wills and executorship
  • Collective Investment
  • Insurance and Pensions
29
Q

What are the two types of Portfolio Management services offered?

A

Discretionary and Advised services

30
Q

What is the difference between Discretionary and Advisory services, in portfolio management?

A

Discretionary allows all relevant decisions to be made by the bank; Advised offers financial advice on the best decisions to make

31
Q

What does a stockbroking service offer to the customer?

A

Buy and sell securities, gilts and/or corporate bonds

32
Q

What is a more appropriate and cost-effective alternative for lower levels of Capital Investment?

A

Collective Investment (unit trusts and OEICs)

33
Q

With regards to financial advice, define “Independent”

A

Can consider any or all retail investment products and recommend accordingly

34
Q

With regards to financial advice, define “Restricted”

A

Only able to recommend certain products or companies.

35
Q

What name is given when a bank offers life insurance through another company that specialises in that field?

A

Bancassurance

36
Q

What does IFA stand for?

A

Independent Financial Adviser

37
Q

What does RDR stand for?

A

Retail Distribution Review

38
Q

What are the two ways that life assurance companies can distribute their products?

A

Intermediaries (Financial Advisers) and their own sales team

39
Q

What is the key USP of a Friendly Society?

A

They are able to offer tax advantaged products,

40
Q

What act enabled Friendly Societies to apply for corporate status and expand their range of services offered?

A

Friendly Societies Act 1992

41
Q

What name is given to large companies (M&S, Sainsbury’s, Virgin) who have taken to offering financial services?

A

Multi-Distribution Organisations

42
Q

The abbreviation CAT refers to what?

A

Charges, Access and Terms

R01 - Financial Services, Regulation and Ethics (10 decks)

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