(Dis)advantages Financial Instituiton

Question 1

Bank of England +ve

Answer 1

• Responsible for protecting the financial stability of the economy as a whole.
• Sets interest rates at a level designed to help achieve a stable economy
• Lends to banks

Question 2

Bank of England -ve

Answer 2

• Not a bank for members of the general public
• Can raise interest rates making borrowing more expensive

Question 3

Bank of England definition

Question 4

Banks +ve

Answer 4

• Offer a range of services and account types
• Provide a secure place to store money
• Pay interest on credit balances on most types of accounts

Question 5

Banks -ve

Answer 5

• Savings are only protected up the value of £85,000, so if a bank goes bankrupt savings above this would be lost
• Profit-making organisations owned by shareholders, therefore costs to individuals may be higher than necessary in order to fulfil shareholder objectives

Question 6

Banks definition

Question 7

Building societies +ve

Answer 7

• Offer a range of services and account types
• Provide a secure place to store money
• Pay interest on credit balances on most types of accounts
• Owned by members and therefore costs can be kept down allowing for higher interest payments

Question 8

Building societies -ve

Answer 8

• Savings are only protected up to the value of £85,000 so if a building society goes bankrupt savings above this would be lost
• May lack the business drive of a commercial bank

Question 9

Building societies definition

Question 10

Credit Unions +ve

Answer 10

• Offer a range of services and account types
• Provide a secure place to store money
• Owned by members and therefore costs can be kept down allowing for higher interest payments
• Often offer additional benefits to the community or a good cause.

Question 11

Credit Unions -ve

Answer 11

• Savings are only protected up to the value of £85,000, so if a credit union goes bankrupt savings above this would be lost
• May lack the business drive of a commercial bank

Question 12

Credit Unions definition

Question 13

National Savings and Investment +ve

Answer 13

• Government-backed, therefore offering security on 100% of savings with no upper limit
• Offers additional services/methods of savings e.g premium bonds.

Question 14

National Savings and investment -ve

Answer 14

• Rates are variable
• Not as easy to access due to lack of a high presence
• Often required to give notice on withdrawals

Question 15

National Savings and Investment definition

Question 16

Insurance companies +ve

Answer 16

• Protect aginast unexpected losses or financial expenses
• Easy and regular monthly payments make planning easy
• Wide range of services and levels of cover to suit the needs of individuals

Question 17

Insurance companies -ve

Answer 17

• Premiums are assessed on the estimated degree of risk which may be seen to penalise some members or groups of society too harshly
• Profit-making organisations therefore premiums will be charged to ensure shareholder needs are met.

Question 18

Insurance companies definitions

Question 19

Pensions companies +ve

Answer 19

• Proveds a structure to help plan for financial security after retirement

Question 20

Pensions companies -ve

Answer 20

Poor investment decision bys the pension company may result in a disappointing turn