Topic 2

Question 1

What is bad competition

Answer 1

where there is a small number of large powerful providers on the market that only aim to maximise sales

Question 2

what can bad competition result in

Answer 2

mis-selling and lack of differentiation

Question 3

What are barriers to entry

Answer 3

The features of the market that make it difficult for new firms to enter and compete

Question 4

what are barriers to expansion

Answer 4

the features of a market that make it difficult for new firms to grow

Question 5

what are challenger banks

Answer 5

any new bank that challenges the big 4

Question 6

what is competition

Answer 6

the number and size of sellers supplying products to a particular market

Question 7

what are the CMA

Answer 7

the body responsible for strengthening business competition and preventing and reducing anti competitive behaviours

Question 8

what is a competitive market

Answer 8

a market where there is a large number of sellers and where no one of these is so big that it can dominate the market

Question 9

concentration ratio

Answer 9

The percentage of a particular market accounted for by a certain number of firms

Question 10

What customer intertia

Answer 10

reluctancy to change financial service provider

Question 11

What is effective competition

Answer 11

When the providers on the market compete to provide the best product

Question 12

Who are the FCA

Answer 12

The organisation that regulates financial firms providing services to consumers

Question 13

What is genuine competition

Answer 13

Where there are several providers, who are independent of each other, that design a range of differentiated products

Question 14

What is good competition

Answer 14

where there are a good number of providers on the market which gives consumers variety

Question 15

What is payment protection insurance

Answer 15

insurance intended to ensure repayment of loans if a borrower faces unexpected events to prevent repayment

Question 16

What is a pressure group

Answer 16

A group who act together to try to bring about change

Question 17

What is product complexity

Answer 17

the idea that financial services products can be too complicated for consumers to understand

Question 18

What is transparency

Answer 18

when customers are given full information on the products available with fully explained terms and conditions

Question 19

what is wasteful competition

Answer 19

Where providers spend huge amounts of money on designing, branding and marketing a product that is only slightly different from those of its competitors

Question 20

what has the largest influence in the retail banking sector

Answer 20

commercial banks

Question 21

what is a benefit of effective competition

Answer 21

customer have more choice

Question 22

what do the financial services consumer panel do

Answer 22

represent the interests of consumers and aid effective regulation

Question 23

what is an example of wasted competition

Answer 23

developing and marketing a product almost identical to that offered by competitors

Question 24

give an example of a challenger bank

Answer 24

metro

Question 25

The current account switch service enables clients to switch their current account provider in how many days

Answer 25

7

Question 26

In terms of competition what is the FCA’s role

Answer 26

to protect and promote competition

Question 27

What type of mergers do the CMA investigate

Answer 27

ones that restrict competition

Question 28

who should someone discuss a pension scheme choice with

Answer 28

independent financial adviser

Question 29

is competition always good for the consumer

Answer 29

no

Question 30

The financial service sector is highly what

Answer 30

concentrated