Chapter 1B - UK Financial Services Structure Flashcards
What are the four key components of the UK financial sector?
Financial Infrastructure
Financial Markets
Financial Firms
The Financial Sector Authorities
Who overseas payment systems in the UK?
The Bank of England
Which company is the main service company for providers of payment systems?
UK Payments Administration Ltd (UKPA)
What name is given to the economic regulator for the UK payment systems industry?
Payment Systems Regulator (PSR)
What is the UK payment systems industry worth?
£81 trillion
What are the 3 statutory objectives of the Payment Services Regulator?
- 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
Payment Services Regulator payment systems should be:
5 answers
- accessible
- reliable
- secure
- value for money
- work well for the user
What do clearing houses and settlement systems do?
Provide infrastructure for clearing and settlement of securities and derivatives markets.
Who is the regulator for recognised investment exchanges?
FCA
Who regulates the recognised clearing houses?
Bank of England
What does EMIR stand for?
European Market Infrastructure Regulation
What are the two kinds of financial market?
On-Exchange and Over-the-Counter (OTC)
Who regulates the key exchanges of the UK financial markets?
The FCA
Define “Money Market”
A wholesale market for commercial borrowers and lenders
Define “Capital Markets”
For trading stocks and shares, fixed interest investments and derivatives (these supply capital for businesses and investments for investors)
Define “Commodity Market”
For trading physical goods (oil, steel, food etc.)
Define “Foreign Exchange (FX) Markets”
For trading foreign currency
Define “Insurance Companies”
For insuring physical assets. These provide capital to secure insurance policies and provide banking and investment management
Define “Investment Companies”
These invest surplus funds for longer term gain
Define “Life Assurance and Pension Companies”
These invest their assets to meet long-term policyholder obligations
Define “Reinsurance Companies”
Companies that provide security to diversify risk from insurance companies
Define “Investment Houses”
These issue pooled investments like unit trusts and open-ended investment companies (OEIC’s)
What are the 3 core services offered by banks and building societies?
Current Account; Deposit Account; Mortgages and Loans
Which is the most flexible sevice offered by banks and building societies?
Current Account
Which service is offered by banks and building societies to fund the purchase of property?
Mortgages and Loans
What interest is paid on credit balances in a Current Account?
Little to none
What name is given to the process of a building society losing its’ mutual status in favour of becoming a public corporation?
Demutualisation
What indirect services are offered by banks and building societies?
(5 answers)
- Portfolio management
- Stockbroking services
- Wills and executorship
- Collective Investment
- Insurance and Pensions
What are the two types of Portfolio Management services offered?
Discretionary and Advised services
What is the difference between Discretionary and Advisory services, in portfolio management?
Discretionary allows all relevant decisions to be made by the bank; Advised offers financial advice on the best decisions to make
What does a stockbroking service offer to the customer?
Buy and sell securities, gilts and/or corporate bonds
What is a more appropriate and cost-effective alternative for lower levels of Capital Investment?
Collective Investment (unit trusts and OEICs)
With regards to financial advice, define “Independent”
Can consider any or all retail investment products and recommend accordingly
With regards to financial advice, define “Restricted”
Only able to recommend certain products or companies.
What name is given when a bank offers life insurance through another company that specialises in that field?
Bancassurance
What does IFA stand for?
Independent Financial Adviser
What does RDR stand for?
Retail Distribution Review
What are the two ways that life assurance companies can distribute their products?
Intermediaries (Financial Advisers) and their own sales team
What is the key USP of a Friendly Society?
They are able to offer tax advantaged products,
What act enabled Friendly Societies to apply for corporate status and expand their range of services offered?
Friendly Societies Act 1992
What name is given to large companies (M&S, Sainsbury’s, Virgin) who have taken to offering financial services?
Multi-Distribution Organisations
The abbreviation CAT refers to what?
Charges, Access and Terms
