The Uk Financial Services Industry Flashcards
What is not a key element of risk management, when considering client investments?
Insuring any potential loss
What is the main difference between banks and building societies?
Banks have shareholders, building societies do not
What method can the Government use to fund borrowing requirements by public money?
Gilts and National Savings and Investments (NS and I)
What does the Bank of England use to influence short term Interest Rates?
The Gilt Repo Market
Which body sets interest rates in the UK?
The Monetary Policy Committee (MPC)
What do Banks do with the money they receive into current accounts?
The place it in long term investments and some is lent back to customers in the form of loans
What is the main purpose of a GILT
Allows the government to borrow money in return for a fixed level of interest. Note - some index linked guilts will vary due to changes in RPI
In addition to financial transactions and earnings, what else can be insured?
Physical assets and profit potential
What are the 4 key components of the financial sector?
Financial Infrastructure
Financial Markets
Financial Firms
Financial Sector Authorities
What is the UKPA and who regulates it?
UK Payments Administraion LTD, regulated by the PSR (Payments System Regulator)
What is the main purpose of a Reinsurance Company?
Provides security to insurance companies by diversifying risk
What were the three European Supervisory Authorities created in 2011? (ESA’s)
The EBA - European Banking Authority
The EIOPA - European Insurance and Markets Authority
The ESMA - The European Securities and Markets Authority
What were the three key objectives of the FSAP (Financial Services Action Plan)?
Create a single EU wholesale market
Achieve open and secure retail markets
Create state of the art prudential rules and structure of supervision
What are the three instruments governing regulation and conduct of the financial services industry?
FSMA - Financial services and markets act 2000
Financial services act 2012
Bank of England and financial services action 2016
What are the four key components of the UK regulatory framework?
PRA - Prudential Regulation Authority
PRC - Prudential Regulation Committee
FPC - Financial Policy Committee
FCA -Financial Conduct Authority
On what savings and investment schemes does the government currently provide tax consessions to?
Pension Schemes
ISA’s
Qualifying life insurance policy proceeds
Friendly society savings plans
Capital gains on gilts and corporate bonds
Certain NS and I products
How can changes in tax rates be used to manipulate the economy?
Changing the tax benefits of certain investments can encourage people to save and therefore restrict growth or unlock capital and spend savings on goods to stimulate growth and the economy
Does the UK welfare system offer sufficient benefits to avoid the need for a private provision?
No, most would find that State welfare is well below the standards they currently expect
Who is responsible for the for the regulation of the financial services sector and under who’s authority?
The Treasury is responsible, under the direct authority of the Chancellor of the Exchequer
What other actions could the government consider to support the welfare system?
Extension of laws relating to compulsory pension contributions
Introduction of compulsory private medical insurance
Tax breaks for health insurance
Further increases to the state pension age
