Topic 18: The role and importance of retail banks Flashcards
What is a proprietary organisation?
Proprietary organisations are those that are owned by their shareholders, who have the right to share in the distribution of the company’s profits in the form of dividends and can contribute to decisions about how the company is run by voting at shareholders’ meetings. These account for the great majority of the large financial institutions in the UK.
What is a mutual organisation?
Mutual organisations are not constituted as a company and do not have shareholders. The most common types of mutual organisation are building societies and friendly societies, which are, in effect, owned by the members. The members can determine how the organisation is managed through general meetings similar to those attended by shareholders of a company. In the case of a building society, the members comprise its depositors and borrowers.
What is a financial intermediary?
An institution that borrows money from the surplus sector of the economy and lends it to the deficit sector.
A lower rate of interest is paid to the person with the surplus and a higher rate of interest is charged to the person with the deficit. An intermediary’s profit margin is the difference between the two interest rates.
What is the triple bottom line (TBL)?
Sustainability framework that examines a company’s social, environmental and economic impact. It measures corporate performance in 3 areas: people, planet and profit.
What are ‘The UN Principles for Responsible Banking’?
The Principles provide the banking industry with a single framework that embeds sustainability at strategic, portfolio and transactional levels across all business areas.
The Principles are:
1) Alignment
2) Impact and target setting
3) Clients and customers
4) Stakeholders
5) Governance and culture
6) Transparency and accountability
What are ‘The Equator Principles’?
A risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects.
What is financial inclusion?
Efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their net worth or company size.
Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives.
What is ISO 26000?
An international standard created to help organisations address social responsibility issues relevant to their communities and the environmental impact, among other factors.
What are credit unions?
Credit unions are financial co-operatives run for the benefit of their members, who are all linked in a particular way by a common bond – for instance by living in the same area or belonging to the same club or organisation. Most credit unions are mutual organisations.
What is a major benefit of credit unions?
Members’ savings and loan balances are covered by life assurance. This means that any loan balance will be paid off on death, and a lump sum equal to the savings held will also be paid, subject to overall limits.
Which body is responsible for enforcing the Consumer Rights Act (CRA)?
The Competition and Markets Authority (CMA)
