topic 3 Flashcards
Automatic credit
transfer
The method by which state benefits are paid directly into a bank
account.
Automation
Where a computer takes over a task previously carried out by a
person.
Bank rate
The interest rate that the Bank of England uses when it lends money
to other banks. Financial services providers take account of the Bank
rate when they decide how to set interest rates on their own
products.
Basic bank account
A current account that allows people to store their money as an
electronic balance and make payments by direct debit, standing
order, prepaid cash card or by withdrawing cash. There is no debit
card, cheque book or overdraft facility on this type of account.
Cash in hand
Being paid in cash, rather than money being paid directly into a
person’s bank account
Competition and
Markets Authority
(CMA)
The body responsible for strengthening business competition and
preventing and reducing anti-competitive activities.
Consumer culture
Where the buying and selling of goods and services is the most
important social and economic activity
Consumer demand
The amount individuals are spending on the goods and services they
are consuming, funded by their incomes, savings and borrowings.
Consumer Protection
from Unfair Trading
Regulations 2008
Legislation that aims to prevent businesses from misleading
consumers about the goods and services they are offering and from
using aggressive sales techniques to pressure people into buying
from them
Contingency plan
A plan to deal with unexpected changes in income or expenditure
Corporate demand
The amount businesses are spending on the goods and services they
are consuming, funded by their revenue, savings, borrowings and
capital injections from investors.
Credit crunch
A reduction in the availability of loans or a tightening of the
conditions needed to obtain one. The global financial crisis of
2007–08 began when financial institutions became reluctant to lend
funds to one another.
Demographic
Statistical data relating to population, eg in terms of age, sex,
ethnicity, culture, social status and geography
Deposit
The lump sum required by a mortgage lender as down payment.
Devaluation
A deliberate reduction in the value of a currency in relation to other
currencies, carried out as part of a government’s economic policy.
Digital divide
Economic inequality caused by a lack of access to, use of, or
knowledge of internet technology
Economic growth
The increase in the market value of the goods and services produced
by an economy over time.
Equity loan
A loan secured on a mortgaged property
EU Directive
A legislative act of the European Union, which requires member
states to achieve a particular result without dictating the means of
achieving that result
EU regulation
A legislative act of the European Union that becomes immediately
enforceable as law in all member states simultaneously
European Union
An economic and political union of 27 member states that the UK
formally left on 31 January 2020
Exports
Goods and services produced in one country and sold to another.
Exchange rate
The price of one currency in terms of another; eg it enables people
to calculate how many US dollars can be purchased with one pound
sterling
External factors
Factors over which individuals have little or no control, such as
interest rates and inflation
Financial Conduct
Authority (FCA)
The organisation that regulates financial firms providing services to
consumers, and maintains the integrity of the UK’s financial markets
Financial exclusion
The inability to get access to even the most basic financial services
products and services
Financial inclusion
The delivery of financial services at affordable cost to disadvantaged
segments of society
Financial literacy
An individual’s level of knowledge and understanding of financial
matters.
Financial
Ombudsman Service
(FOS)
An independent body set up by Parliament that settles customer
complaints about providers at no charge to consumers
Financial Policy
Committee (FPC)
A part of the Bank of England that monitors and responds to risk
posed to the entire financial services market. Its focus on the whole
market makes it a macro-prudential authority.
Financial regulation
The rules that govern how financial services providers operate and
deal with their customers
Financial Services
Act 2012
A key Act of Parliament governing the regulation of the financial
services industry
Financial Services
Compensation
Scheme (FSCS)
A compensation scheme that pays compensation to account holders
of up to a certain amount per provider if the provider goes into
default (so cannot pay account holders the money in their accounts).
Fiscal policy
How the government manages the amount of money it raises in
taxation, the amount it borrows on the financial markets, and the
overall amount it spends.
Floating exchange
rate
Where the value of a currency is determined by the supply of and
demand for that currency
General Data
Protection
Regulation
European Union legislation implemented on 25 May 2018. In the UK,
its provisions supersede those of the Data Protection Act 1998 with
the creation of the Data Protection Act 2018
Globalisation
The integration of economies, industries, markets, cultures and
policy-making around the world
Green technology
Processes and products that are renewable, sustainable or
non-polluting, such as energy from tidal power.
Grey culture
The older section of the population
Housing market
The buying and selling of residential property
Inflation
A rise in prices, which means that the purchasing power of money
falls.
Information failure
A situation in which consumers are not fully informed about a
product
interest rates
The amount, expressed as a percentage, that a financial services
provider charges a borrower when it lends money, or pays to a saver.
Migration
The movement of people from one location to another
Mis-selling
When an individual or provider is negligent or reckless in selling a
product to an unsuitable customer, or in misrepresenting the
contract
Monetary policy
The manipulation of interest rates to maintain low inflation
Monetary Policy
Committee (MPC)
The Bank of England committee responsible for keeping inflation
under control by the manipulation of interest rates.
Multiculturalism
Taking account of the different cultural needs and expectations of
the various ethnic groups that make up society.
Negative equity
The situation where a mortgage loan is bigger than the value of the
property.
Owner-occupiers
Those who own their own property outright or have a mortgage
on it.
Pandemic
Where an infectious disease spreads rapidly to many people across a
large region.
Payment protection
insurance (PPI)
An insurance product intended to ensure repayment of loans should
a borrower face unexpected events that prevent them from repaying
the debt.
PESTEL analysis
A tool used to analyse how six key areas (Political, Economic, Social,
Technological, Environmental and Legal) in the external environment
might affect individual and corporate financial decisions
Prudential
Regulation Authority
(PRA)
One of the two main regulators of financial services in the UK (the
other is the Financial Conduct Authority).
Social inclusion
Ensuring all individuals and groups in society have access to certain
rights, such as employment, adequate housing, healthcare,
education and training
Sub-prime market
Lending to and borrowing by consumers with untested or poor credit
histories
Sustainability
Meeting the needs of society in ways which can continue indefinitely
into the future without damaging or depleting natural resources
Trading Standards
An organisation that will investigate individual cases of bad practice
on behalf of consumers and take steps to resolve the problem
Youth culture
The term used to describe the values, attitudes and interests shared
by people in their teens and early 20s
‘PESTEL analysis is used to consider how six key areas in the external environment might affect individual and corporate:
financial decisions
The Competition and Markets Authority has powers and responsibilities for general consumer protection across:
across all industries and businesses
A key objective in ensuring that all individuals have access to the benefits provided by financial products and services is social
inclusion
Economists use the term ‘information failure’ to describe a situation where
consumers are not fully informed about a product
What prompted the Monetary Policy Committee to reduce Bank rate to 0.25% in August 2016?
The Brexit referendum result
An equity loan is most likely to financially benefit a borrower who uses the funds to:
make home improvements
The relationship between interest rates and share prices can be correctly described as:
when interest rates rise, share prices tend to fall
At times of high unemployment people’s financial planning priority tends to be:
protection planning
A rise in the value of sterling means that:
the cost of buying goods and services from other countries falls
Which body is currently responsible for conducting market studies and investigations where there may be competition and consumer problems?
The Competition and Markets Authority (CMA)
Demographics is the term used to describe the analysis of a population in terms of age, sex, ethnicity, culture, social status and geography. TRUE OR FALSE
True
The processes that lend themselves to automation are those that need judgement or discretion. TRUE OR FALSE
FALSE
