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Finance > Revised Specimen > Flashcards

Revised Specimen Flashcards

1
Q

Where are banknotes issued in northern ireland legal tender?

A

They are not legal tender anywhere

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1
Q

Under normal circumstances, the Financial Services Compensation Scheme (FSCS) protects the savings of an individual up to what maximum amount?

A

£85k per person per provider

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2
Q

Cynthia is employed and earns £52,000 a year. Her NI payments are..

A

Class 1 contributions

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3
Q

At which stage of the life cycle is someone most likely to get married and/or have children?

A

Mature Adult (26-40)

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4
Q

Lifelong financial planning in the UK has been affected by changes in the age when men and women can receive a state pension. In 2020, what was the age increased to?

A

66

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5
Q

What form of borrowing requires the amount borrowed to be repaid in full every month?

A

Charge card

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6
Q

What is the percentage of money saved that makes the NS&I savings products famous?

A

100% guaranteed

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7
Q

What is a savings bond?

A

Form of fixed term investment (Money is “locked away” for a long period of time)

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8
Q

Who is responsible for ensuring that all financial services providers operate in a way that benefits consumers and the market as a whole?

A

Financial Conduct Authority (FCA)

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9
Q

Luna works eight hours a day as a claims handler for an insurance firm. According to the Working Time Regulations 1998, what length of a break is Luna entitled to?

A

20 minutes

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10
Q

What is the interest rate quoted on a savings account indicated by?

A

AER

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11
Q

British banknotes have a promise on them to ‘pay the bearer on demand the sum of’ followed by the amount of money the banknote represents. Who is this promise signed by?

A

Chief Cashier of the Bank of England

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12
Q

What is demutualisation?

A

A process whereby a mutual organisation legally becomes a shareholder-owned joint stock company building societies becoming banks

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13
Q

An administration order in England, Wales or Northern Ireland applies to people who have less than what amount in unsecured debt?

A

£5k

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14
Q

A debt relief order enables a person to write off their debts if they are unable to repay them after what maximum length of time?

A

12 months

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15
Q

What is known as the principal in a personal loan?

A

The amount borrowed

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16
Q

When Brian’s provider goes out of business, he discovers that he is not able to reclaim his savings. This is because his provider has not been authorised by the..?

A

FCA (Financial conduct authority)

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17
Q

What does AER stand for and what does it mean?

A

Annual Equivalent rate and it is the interest that will be earned on the money in the bank in one year and takes into account how often the provider pays the interest (percentage of interest you’ll receive each year for holding savings with your bank)

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18
Q

What does APR stand for and what does it mean?

A

Annual Percentage rate and it is the total cost of borrowing over a year

19
Q

What is a cash flow forecast?

A

A plan expected incomings and outgoings over several time periods

20
Q

What is a cash ISA?

A

An account that pays interest tax-free on cash savings up to a certain level

21
Q

What is the FCA?

A

Financial Conduct Authority, one of the two main regulators of financial services in the UK

22
Q

What is the FOS?

A

Financial Ombudsman Service, an independent body set up by Parliament that settles customer complaints about providers at no charge to customers.

23
Q

What is the FPC?

A

Financial policy committee, a part of the bank of England that monitors and responds to risk posed to the entire financial services market.

24
Q

What is voluntary excess?

A

The excess is the amount paid on any claim by the policyholders before the insurance company will pay anything

25
Q

What is return?

A

The interest the provider pays on savings

26
Q

Who decides the AER payable by a savings account provider

A

The provider

27
Q

To get a return above inflation, savers need their money to earn an AER that is higher, lower or the same as the rate of inflation?

A

Higher

28
Q

What is the main difference between the CPI and the RPI?

A
29
Q

What is CPI?

A
30
Q

What is RPI?

A
31
Q

Savings at NS&I are said to be 100% safe because they are backed by?

A

Her majesty’s treasury

32
Q

What are the five solutions for dealing with unmanageable debt?

A
  1. Debt management plan
  2. Administration Order (AO)
  3. Individual Voluntary Arrangements (IVA)
  4. Debt relief orders (DRO)
  5. Bankruptcy
33
Q

What does in mean when someone is classed as insolvent?

A

Their debts are greater than their assets and they cant repay what they owe

34
Q

How does a DMC work?

A

If an individual has many debts they may set a debt management plan with a debt management company (DMC)
The individual will pay the DMC what they can afford each month and then the DMC will divide this between organisations that are owed money

35
Q

What is an administration order?

A

a formal and legally-binding agreement between you and your creditors to pay back your debts over a period of time

36
Q

What must one have to be eligible for an AO?

A
  1. debts that are no more than £5,000
  2. unpaid country court judgement or high court judgement
  3. two or more debts
37
Q

What are the advantages of an DMC?

A
  1. Easier to manage as debtor only makes one affordable monthly payment to their DMC.
  2. Debtor has longer to repay what they owe
38
Q

What are the disadvantages of a DMC?

A
  1. Only deal with non priority debts (repayment on loans not mortgages
  2. Creditors might still contact the person who owes them money
  3. Creditors do not have to accept the debt management plan
  4. Debt will take longer to clear as monthly repayments are smaller (Many creditors wont add interest and fees as long as the repayments are being made)
39
Q

What happens if you don’t have a country court judgement or high court judgement if you want an AO?

A

You will have to wait till one of your creditors take court action against you

40
Q

Who is an administration order arraigned by?

A

County Courts in Wales, England and Northern Ireland.

41
Q

What are the advantages of an AO?

A
  1. The person who owes the money makes one monthly repayment that they can afford
  2. Creditors are not permitted to contact debtors directly as well as add any interest on the debt
  3. If the debtor cannot repay the debt in a reasonable time, the court can set an end date for the AO and the creditors must write off any debt that is still outstanding
42
Q

What is the main disadvantage of an AO?

A
  1. The court decides what the debtor can afford to repay and this may mean that the debtor may have to live on a strict budget while the debt is being repaid.
43
Q

What is IVA?

A

Individual Voluntary Arrangements.
This means the debtor makes affordable repayments for 5 or 6 years then the debt is written off.
They are legally binding arrangements for debtors and creditors.

44
Q

Who does an IVA apply to?

A

People who have unsecured debts that are larger than their assets

Finance (8 decks)

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