Financial Institutions

Question 1

Bank of England

Answer 1

• regulates and supervises banks,building societies, insurance companies and investment companies
• responsible for maintaining the UK’s monetary and financial stability
• sets interest rates - if it increases rates, the cost of borrowing will rise
• independent from government

Question 2

Building societies

Answer 2

• owned by their members (account holders)
• provide financial services E.g. savings accounts, mortgage
• can offer better interest rates and savings than bank

Question 3

Credit unions

Answer 3

• financial corporation be owned and run by their members
• not for profit organisations
• offer members saving accounts,current accounts and loans
• more limited funds and opportunities than commercial banks and building societies

Question 4

Payday loan companies

Answer 4

• businesses that offer short term loans to people requiring cash between paydays
• immediate cash available even for those with poor credit history
• very expensive and easy to get into deeper debt