Topic 2 Flashcards
What is bad competition
where there is a small number of large powerful providers on the market that only aim to maximise sales
what can bad competition result in
mis-selling and lack of differentiation
What are barriers to entry
The features of the market that make it difficult for new firms to enter and compete
what are barriers to expansion
the features of a market that make it difficult for new firms to grow
what are challenger banks
any new bank that challenges the big 4
what is competition
the number and size of sellers supplying products to a particular market
what are the CMA
the body responsible for strengthening business competition and preventing and reducing anti competitive behaviours
what is a competitive market
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
concentration ratio
The percentage of a particular market accounted for by a certain number of firms
What customer intertia
reluctancy to change financial service provider
What is effective competition
When the providers on the market compete to provide the best product
Who are the FCA
The organisation that regulates financial firms providing services to consumers
What is genuine competition
Where there are several providers, who are independent of each other, that design a range of differentiated products
What is good competition
where there are a good number of providers on the market which gives consumers variety
What is payment protection insurance
insurance intended to ensure repayment of loans if a borrower faces unexpected events to prevent repayment
What is a pressure group
A group who act together to try to bring about change
What is product complexity
the idea that financial services products can be too complicated for consumers to understand
What is transparency
when customers are given full information on the products available with fully explained terms and conditions
what is wasteful competition
Where providers spend huge amounts of money on designing, branding and marketing a product that is only slightly different from those of its competitors
what has the largest influence in the retail banking sector
commercial banks
what is a benefit of effective competition
customer have more choice
what do the financial services consumer panel do
represent the interests of consumers and aid effective regulation
what is an example of wasted competition
developing and marketing a product almost identical to that offered by competitors
give an example of a challenger bank
metro
The current account switch service enables clients to switch their current account provider in how many days
7
In terms of competition what is the FCA’s role
to protect and promote competition
What type of mergers do the CMA investigate
ones that restrict competition
who should someone discuss a pension scheme choice with
independent financial adviser
is competition always good for the consumer
no
The financial service sector is highly what
concentrated
