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btec business > personal and business finance - learning aim B. > Flashcards

personal and business finance - learning aim B. Flashcards

1
Q

how many financial institutions are there?

A

there are 9 financial institutions.

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2
Q

describe the bank of england.

A

this is the UK’s central bank and they ensure the financial stability of the UK. they set interest rates, print bank notes and store gold bars. does not lend to the general public.

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3
Q

describe banks.

A

a bank handles financial transactions and stores money on behalf of the general public. allow people to make payments, access credit and save.

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4
Q

describe building societies.

A

similar to banks. provide services to the general public, such as day to day banking, mortgages and credit. they are owned entirely by their members, set rates that benefit themselves.

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5
Q

describe credit unions.

A

a member owned financial cooperative. controlled by its members, provides members credit at competitive prices.

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6
Q

describe national savings and investment (NS&I).

A

NS&I is a government based organisation that offers a secure saving option. it offers a range of options such as ISA’s, premium bonds and gilts.

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7
Q

describe insurance companies.

A

these are for profit businesses that protect people against loss in return for a monthly premium.

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8
Q

describe pension companies.

A

set policies to individuals or companies that enable themselves to save for future retirement. usually invest money deposited by the individual for future use.

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9
Q

describe pawnbrokers.

A

loan money to individuals and secure the loan against an asset. most commonly pawned asset is jewellery. if the item is not bought back then the item will be sold in order to recoup the loan.

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10
Q

describe payday loans.

A

short-term loans that are intended to bridge the gap between one payday to another in case of emergency. interest rates are extremely high and so payday loans should be avoided where possible.

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11
Q

what are the advantages of the bank of england?

A

protect the financial stability of the uk.
they lend to banks.
they set interest rates.

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12
Q

what are the disadvantages of the bank of england?

A

they do not lend to the general public.
can raise interest rates, therefore making borrowing more expensive.

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13
Q

what are the advantages of the banks?

A

they are a secure place to store money.
pay interest on savings.
offer a variety of services.

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14
Q

what are the disadvantages of banks?

A

savings only protected up to £85,000 if bank goes bankrupt. owned by shareholders, designed to make a profit.

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15
Q

what are the advantages of building societies?

A

owned by its members.
offer a variety of services.
pay interest on savings.
safe place to store money.

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16
Q

what are the disadvantages of building societies?

A

may lack the business drive of commercial banks as banks are profit driven.
savings only protected up to £85,000.

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17
Q

what are the advantages of credit unions?

A

offer a variety of services.
owned by its members.
offer additional benefits to the community and charities.

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18
Q

hat are the disadvantages of credit unions?

A

may lack the business drive of commercial banks as banks are profit driven.
savings only protected up to £85,000.

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19
Q

what are the advantages of national savings & investment (NS&I)?

A

savings are 100% secure as its government backed.
various ways to save such premium bonds.

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20
Q

what are the disadvantages of national savings & investment (NS&I)?

A

variable rates.
lack a high street presence.
usually need to give notice on withdrawals.

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21
Q

what are the advantages of insurance companies?

A

protection against unexpected losses/events.
cover available on a variety of things.
pay monthly so easier to budget.

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22
Q

what are the disadvantages of insurance companies?

A

premiums assessed on risk, the higher the risk, the higher the premium.
owned by shareholders, therefore designed to make a profit.

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23
Q

what are the advantages of pension companies?

A

structured way to plan for retirement.
matched contributions by employer.
tax benefits.

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24
Q

what are the disadvantages of pension companies?

A

poor investment decisions may lead to a poor return on investment.
cannot access money until agreed term.

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25
Q

what are the advantages of pawnbrokers?

A

quick way of acquiring short term cash.
interest not charged.
buy back pawned asset.

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26
Q

what are the disadvantages of pawnbrokers?

A

amount given for the asset is much lower than its worth.
asset will be sold on if loan is not repaid.

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27
Q

what are the advantages of payday loans?

A

quick way of acquiring cash in a short period of time.

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28
Q

what are the disadvantages of payday loans?

A

interest charged is very high which results in the amount being paid back being substantially higher.

29
Q

what are the 5 methods of communicating with customers?

A

telephone, branch, online, mobile, postal.

30
Q

describe telephone communication.

A

customers can carry out banking transactions over the phone. service is available 24/7 and is usually just for automated services e.g. checking balances and paying bills.

31
Q

describe branch communication.

A

a physical place where transactions can be carried out face-to-face. customers visit the bank to carry out their banking needs. this could be by using self-service machines or seeking advice from an employee at the bank. only available when the branch is open.

32
Q

describe online communication.

A

allows customers the opportunity to manage their banking needs over the internet on a computer. they can do many of the same things that can be carried out in a branch, however online does have its limitations as money can’t be deposited or withdrawn. 24/7 access.

33
Q

describe mobile communication.

A

similar to online banking but the service is accessed via a mobile device such as a smartphone or tablet and is available 24/7.

34
Q

describe postal communication.

A

paper based financial transactions. many banks still send out paper copies of statements and some customers may still pay their bills by cheque.

35
Q

what are some advantages of branch communication?

A

there is the ability to build relationships,
it encourages brand loyalty.
additional services can be offered.
customers have confidence in this.

36
Q

what are some disadvantages of branch communication?

A

only available during opening hours.
takes considerably longer.
you need to travel to the branch.
additional costs are involved.

37
Q

what are some advantages of online communication?

A

its very convenient.
you have 24/7 access.
it is private.

38
Q

what are some disadvantages of online communication?

A

you cannot withdraw cash.
it may have limited facilities.
it takes time to register and set up.
you may be a victim of cyber crime.

39
Q

what are some advantages of telephone communication?

A

there is no additional charges.
it is convenient.

40
Q

what are some disadvantages of telephone communication?

A

it is only available during set hours.
there are limited services provided.
there is a risk of fraud or identity theft.
automated services can be annoying.

41
Q

what are some advantages of mobile communication?

A

it is convenient.
it is easy to use.
it is available 24/7.

42
Q

what are some disadvantages of mobile communication?

A

you may need to download an app.
there is the possibility of being hacked.
there is higher risk if you lost your mobile device.

43
Q

what are some advantages of postal communication?

A

it is a traditional method that customers are comfortable with.
there is no additional technology required.

44
Q

what are some disadvantages of postal communication?

A

post can be lost.
it takes longer than other methods.

45
Q

how many financial protection bodies are there?

A

four.

46
Q

what is the financial conduct authority (FCA)?

A

an independent organisation that is the conduct regulator for 59,000 financial services firms and financial markets in the UK. it is funded via charges to the financial service providers and their work focusses on three key areas: authorisation, enforcement and supervision.

47
Q

what is the financial ombudsmen service (FOS)?

A

they are appointed by the government to protect and represent consumers who are in disputes with financial service providers. they only get involved if these disputes cannot be settles between the financial provider and the consumer. they are funded by compulsory fees charges to all regulated financial institutions.

48
Q

what is the financial services compensation scheme (FSCS)?

A

an organisation that pays compensation to consumers when the financial service provider is unable to. protects savers up to £85,000 if the institution goes bust and the saver will be compensated by the FSCS.

49
Q

what is legislation: consumer credit?

A

laws have been passed to regulate any business offering credit to consumers. these laws are passed by the UK government to ensure consumers are protected and that financial providers do not take advantage.

50
Q

how many types of information and guidance are there?

A

6 types.

51
Q

what is citizens advice?

A

it is a charity run organisation that provides advice on a range of financial and non financial issues. this can be done via a face to face appointment, over the phone or online. advice covers areas including debt, benefits, pensions and insurance.

52
Q

what is an independent financial advisor (IFA)?

A

a professional individual who provides independent advice and guidance on a range of financial products such as; mortgages, pensions, insurance and investing. they must be qualified and are regulated by the government.

53
Q

what is a price comparison website?

A

they do exactly what their name implies as they compare the price of goods and services from a large range of companies.

54
Q

what are debt councellors?

A

this is a professional service that offers independent advice. it is a common process that is used to help individuals with debt settlements, through education, budgeting and the use of a variety of tools with the goal to reduce and eliminate debts.

55
Q

what is an individual voluntary agreement (IVA)?

A

an agreement with your creditors to pay all or part of your debts. you will agree to make your payments to an insolvency practitioner, who will divide this money between your creditors.

56
Q

what is bankruptcy?

A

it is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. in most jurisdictions, bankruptcy is imposed by a court order.

57
Q

what are the advantages of citizens advice?

A

it’s free.
it covers a wide range of areas.
you can do it face-to-face, online or by telephone.

58
Q

what are the disadvantages of citizens advice?

A

they are trained volunteers, not professionals.
their knowledge in finance may be limited.

59
Q

what are the advantages of an independent financial advisor (IFA)?

A

advice is offered by professionals.
advice is based on customer needs and circumstances.
no commission.

60
Q

what are the disadvantages of an independent financial advisor (IFA)?

A

they charge fees.
they are dependent on the quality of the advisor.

61
Q

what are the advantages of price comparison websites?

A

you have 24/7 access.
it is free.
it is easy to compare.

62
Q

what are the disadvantages of price comparison websites?

A

it could be bias.
it does not always cover all providers.

63
Q

what are the advantages of debt councellors?

A

professionals who specialise in debt.
regulated by the FCA and FOS.

64
Q

what are the disadvantages of debt councellors?

A

it is not free.
only focusses on debt.

65
Q

what are the advantages of individual voluntary agreements (IVA)?

A

helps manage debt via regular payments.
unbiased as advice is independent.

66
Q

what are the disadvantages of individual voluntary agreements (IVA)?

A

fees are charged for the service.
impact on credit rating.

67
Q

what are the advantages of bankruptcy?

A

it suspends any debt collection.
debts are usually fully written off.

68
Q

what are the disadvantages of bankruptcy?

A

may get all assets repossessed.
stays on your credit report for 7-10 years.
difficult to borrow in the future.

btec business (6 decks)

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