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Business Studies A-Level 🌙 > Learning Aim B > Flashcards

Learning Aim B Flashcards

1
Q

Financial institutions (9) ?

A

Bank of England
Banks
Building societies
Credit unions
National savings and investments
Insurance companies
Pension companies
Pawnbrokers
Payday loans

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2
Q

Features of the Bank of England?

A

UK’s central bank

Responsibility for maintaining healthy level of financial stability for the UK

Responsibilities include issuing legal tender, setting interest rates, and controlling national debt

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3
Q

Features of banks ?

A

Organisation that handles financial transactions and stores money on behalf of its customers

Services offered include holding deposits, making payments and supplying credit

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4
Q

Features of building societies?

A

Handle financial transactions and store money on behalf of its members

Members are part owners and have the right to vote and receive info on running the society

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5
Q

Features of credit unions ?

A

Not for profit organisation that handle financial transactions and store money on behalf of its members

Often a desire to support a community made up of its members

Members are owners and have a voting right

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6
Q

Features of national savings and investments ?

A

Government backed organisation that offers a secure saving option

Offers range of options including ISAs, premium bonds and bonds and gilts

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7
Q

Features of insurance companies?

A

Businesses that protect against the risk of loss in return for a premium

Profit making organisations

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8
Q

Features of pension companies ?

A

Businesses that sell policies to people allowing them to save for retirement

Normally they’ll invest the money paid to them in order to increase its value.

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9
Q

Features of pawnbrokers ?

A

Businesses or individuals who loan money against the security of a personal asset E.g. jewellery

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10
Q

Features of payday loans ?

A

Organisations that offer a short term source of finance to bridge gap between now and payday

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11
Q

Advantages of the Bank of England ?

A

Set interest rates to achieve stable economy

Lends to banks

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12
Q

Disadvantages of the Bank of England ?

A

Not a bank for members of the general public

Ability to raise interest rates and make borrowing more expensive

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13
Q

Advantages of banks ?

A

Offer range of services and account types

Provide secure place to store money

Pay interest on credit balances for most accounts

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14
Q

Disadvantages of banks ?

A

Savings only protected up to £75,000. Therefore if bank goes bankrupt, this will be lost

Profit making organisation owned by shareholders, therefore costs to individuals may be higher to meet shareholder objectives

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15
Q

Advantages of building societies?

A

Offer range of services and account types

Secure place to store money

Interest paid on credit balances

Owned by members therefore costs can be kept down allowing for higher interest payments

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16
Q

Disadvantages of building societies?

A

Savings only protected up to £75,000. Therefore if bank goes bankrupt, this will be lost

May lack business drive of commercial banks

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17
Q

Advantages of credit unions ?

A

Offer range of accounts and services

Secure place to store money

Owned by members, therefore costs can be kept down

Offer additional benefits to the community or a good cause

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18
Q

Disadvantages of credit unions ?

A

Savings only protected up to £75,000. Therefore if bank goes bankrupt, this will be lost

May lack business drive of commercial banks

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19
Q

Advantages of national savings and investment?

A

Government backed therefore offering security on 100% of savings

Offers additional services and Methods of saving E.g. premium bonds

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20
Q

Disadvantages of national savings and investment ?

A

Rates are variable

Not as easy to access due to lack of high street presence

Often required to give notice on withdrawals

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21
Q

Advantages of insurance companies?

A

Protection against unexpected loss or financial expenses

Easy and regular monthly payments making planning easier

Wide range of services and cover to suit needs of all customers

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22
Q

Disadvantages of insurance companies?

A

Premiums are assessed on estimated degree of risk - may penalise some people too harshly

Profit making organisation therefore premiums will be charged

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23
Q

Advantages of pension companies?

A

Help to plan for financial security after retirement

Deductions can be taken directly from pay

Experts employed to make best investment decisions

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24
Q

Disadvantages of pension companies?

A

Poor investment decisions may result in a disappointing return

Money already invested can’t be released until agreed policy dates

25
Q

Advantages of pawnbrokers ?

A

Quick way of acquiring cash

Asset can be brought back within set period of time

Interest is not charged

26
Q

Disadvantages of pawnbrokers?

A

Amount given for asset is usually substantially lower than its actual worth

If Money is not repaid within agreed time, the asset will be sold on

27
Q

Advantages of payday loans ?

A

Quick way of acquiring cash for short term

28
Q

Disadvantages of payday loans ?

A

Interest charges are likely to be very high

Often results in paying back a final sim usually much higher than intial amount borrowed

29
Q

Communicating with customers (5) ?

A

Branch
Online banking
Telephone banking
Mobile banking
Postal banking

30
Q

Advantages of communicating with customers through a branch ?

A

Opportunity to build a relationship, trust and brand loyalty

Transactions can be conducted then and there

Advice can be offered

Gives customer high level of confidence

31
Q

Disadvantages of communicating through a branch ?

A

Need to travel resulting is potential travel costs

Restricted to bank opening hours

Time consuming E.g. long queues and travel time

32
Q

Advantages of communicating with customers through online banking ?

A

Available 24/7

Privacy

Convenient

33
Q

Disadvantages of communicating through online banking ?

A

Takes time to set up or apply

Not suitable for cash withdrawals

Risk of cyber crime

If only an online account, facilities may be limited

34
Q

Advantages of communicating with customers through telephone banking ?

A

Convenient especially for basic functions E.g. checking a balance

No additional charges

35
Q

Disadvantages of communicating through telephone banking?

A

Full access may be limited to set hours

Call centres and automated systems may frustrate customers

Higher risk of fraud or identity theft

36
Q

Advantages of communicating with customers through mobile banking?

A

Convenient

Available 24/7

No additional charges

37
Q

Disadvantages of communicating through mobile banking?

A

May need to download specific apps to access

Higher security risk due to increase risk of fraud of theft of mobile

Can be prone to hackers sending fake texts

38
Q

Advantages of communicating with customers through postal banking

A

Traditional method, many customers feel comfortable

Doesn’t require technology

39
Q

Disadvantages of communicating through postal banking?

A

Can be slow due to postal system

Post may get lost

40
Q

Consumer protection (5) ?

A

Financial Conduct Authority (FCA)

Financial Ombudsman Service (FOS)

Financial Services Compensation Scheme (FSCS)

Office of fair trading (OFT)

Legislation: consumer credit

41
Q

What is the Financial Conduct Authority (FCA) ?

A

Independent organisation with a remit to regulate the actions of providers of financial services

Funded my membership fees

Focus on three areas: authorisation, supervision and enforcement

42
Q

What is the Financial Ombudsman Service (FOS) ?

A

Organisation appointed by the government to represent the interests of the consumer disputes with financial service providers

Funded by compulsory fees charged to financial institutions

FOS becomes involved in disputes if they cannot he settled between the consumer and financial service

43
Q

What is the Financial Services Compensation Scheme (FSCS) ?

A

Organisation in the UK that pay compensation to a consumer of financial services if the service cannot pay

Protects all savers in banks and building societies up to £5000 - if the institution goes bankrupt, the savings will be refunded by FSCS

44
Q

What is the Office of Fair Trading (OFT) ?

A

Government organisation that regulates all markers including financial

Aim to encourage health competition between financial institutions

45
Q

What is the Legislation: consumer credit ?

A

Laws passed by the UK government to enforce regulation of any firm offering credit to consumers

46
Q

Different financial information providers (6) ?

A

Citizens advice

Independent financial advisor (IFA)

Price comparison websites

Money advice service

Debt counsellors

Individual voluntary arrangements (IVAs) bankruptcy

47
Q

Advantages of Citizens advice ?

A

Free service

Available face to face and online

Wide range of areas covered

48
Q

Disadvantages of citizens advice ?

A

Trained volunteers- not professionals therefore knowledge may be limited

49
Q

Advantages of independent financial advisor (IFA) ?

A

Offered by professionals

Regulated by the FCA and FOS

Advisors will take time to assess situation

50
Q

Disadvantages of independent financial advisors (IFA) ?

A

Services charged for

Advice offered isn’t 100% guaranteed to be unbiased or up to date

51
Q

Advantages of price comparison websites?

A

Easy to access 24/7

Free service

52
Q

Disadvantages of price comparison websites?

A

Not guaranteed to be 100% up to date or unbiased

Doesn’t always cover all available options- limited

53
Q

Advantages of money advice service ?

A

Government funded therefore advice is free

Covers wide range of financial matters

54
Q

Disadvantages of money advice service ?

A

Only available online or over the telephone

Can take time to find and understand exact advice

Advice can be generic rather than personal

55
Q

Advantages of debt counsellors ?

A

Advice offered is by a professional who specialises in debt management

Regulated by FCA and FOS

56
Q

Disadvantages of debt counsellors ?

A

Services charged for

Only focuses on debt management rather than all financial concerns

57
Q

Advantages of individual voluntary arrangements (IVAs) bankruptcy?

A

Helps manage debt repayment, with regular payments making budgeting easier

Independent advice without bias

58
Q

Disadvantages of individual voluntary arrangements (IVAs) bankruptcy?

A

Set up and handling fees are charged

Will affect future credit ratings

Business Studies A-Level 🌙 (5 decks)

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