Topic 3 Key Terms 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.
Demographics
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 a 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, to settle in the new location.
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 is 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.
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.
