The UK financial Services Industry

Question 1

Both individuals and companies have protection needs on their:

Answer 1

Physical assets
Earnings
Profit potential
Financial transactions

Question 2

What are the two options for government borrowing?

Answer 2

Gilts and national savings and investments (NS&I)

Question 3

How does a gilt work?

Answer 3

They pay fixed levels of income over regular intervals (6 months)

Question 4

Which benchmark is used to measure the rate of inflation for index linked gilts ?
When and what index are they moving to?

Answer 4

Retail Price Index

2030 & Consumer Price Index including Housing (CPIH)

Question 5

What are the two objectives for capital markets?

Answer 5

Enable investors to invest in assets that provide the potential for real growth
Help companies raise money without necessarily going to the bank

Question 6

Capital markets introduced which to types of financial instrument?

Answer 6

Shares
Fixed-Interest stocks (bonds)

Question 7

What are the four key components within the financial sector

Answer 7

Financial infrastructure
Financial markets
Financial firms
Financial sector authorities

Question 8

Who overseas the payment systems in the UK?

Answer 8

The Bank of England

Question 9

Who is the operators of the UK’s retail payment systems?

Answer 9

Pay.UK

Question 10

Who regulates the payments system industry?

Answer 10

Payment Systems Regulator (PSR)

Question 11

What is a over-the-counter trade? The

Answer 11

Participants trade stocks, commodities, currencies, or other instruments directly between two parties and without a central exchange or broker.

Question 12

What are the core services of Banks and building societies?

Answer 12

Current accounts
Deposit accounts
Mortgages and loans

Question 13

What are the main indirect services offered by banks and building societies?

Answer 13

Portfolio management
Stockbroking services
Wills and executorship
Collective investments
Insurance and pensions

Question 14

What is a bancassurer?

Answer 14

A bank or building society which have set up their own insurance company which forms part of their ties or multi tied offering

Question 15

What are the three EU supervisory authorities?

Answer 15

European Banking Authority (EBA)
European Securities and Markets Authority (ESMA)
European Insurance and Occupational Pensions Authority (EIOPA)

Question 16

Which government department is responsible for the regulation of financial services?

Answer 16

The Treasury

Question 17

Who has the overall authority over the Treasury?

Answer 17

The Chancellor of the Exchequer

Question 18

Name the three regulatory bodies under the Financial Services Act (FSA):

Answer 18

Financial Policy Committee
Financial Conduct Authority
Prudential Regulation Authority

Question 19

What is dual regulation?

Answer 19

When FCA and PRA regulate together

Question 20

Who governs the PRA?

Answer 20

Prudential Regulation Committee

Question 21

What can the impact of taxation have on the economy?

Answer 21

To raise revenue for the government and to re distribute wealth

Question 22

What is the purpose of high and low taxation

Answer 22

High taxation reduces the money in circulation so reduces the ability to spend
Low taxation means more money available so stimulates the economy

Question 23

What is the fiscal policy?

Answer 23

Control of taxation, government spending and borrowing

Question 24

What is the monetary policy?

Answer 24

Control of interest rates and money supply

Question 25

How does the government borrowing and spending money effect the economy?

Answer 25

Spending: more money in circulation more significant than tax cuts
Borrowing: reduces money in circulation so reduces economic activity

Question 26

Who sets the interest rates?

Answer 26

The Monetary Policy Committee within the Bank of England

Question 27

What is used to influence short-term interest rates?

Answer 27

Gilt Repo Market

Question 28

What is the FATF an abbreviation of?

Answer 28

Financial Action Task Force

Question 29

Historically, uk banks and building societies were developed from the consumer need to:

Answer 29

Provide a safe but accessible place to keep individuals money