Topic 7 Key Terms

Question 1

Bitcoin

Answer 1

A virtual currency.

Question 2

Boomerang generation

Answer 2

Young adults who leave home and then need to return because they cannot afford to rent or buy a home of their own.

Question 3

Capital Requirements Directive

Answer 3

European Union legislation that specifies the liquid assets that providers must hold to ensure they can meet demand if large numbers of customers want to withdraw their money at the same time.

Question 4

Challenger bank

Answer 4

Any new bank that challenges the dominance of the ‘big five’. Examples include Virgin Money, Metro Bank, TSB, Williams and Glyn, the Post Office and Tesco Bank.

Question 5

Equity loan

Answer 5

A loan secured on a mortgaged property.

Question 6

EU Deposit Guarantee Scheme Directive

Answer 6

European Union legislation that sets out the minimum level of compensation for depositors if a financial institution fails. It was set at €100,000 in 2010.

Question 7

EU Directive

Answer 7

A legislative act of the European Union, which requires member states to achieve a particular result without dictating the means of achieving that result.

Question 8

EU Gender Directive

Answer 8

European Union legislation setting out the principle that men and women should be able to access goods and services on an equal basis, eg insurance premiums cannot be calculated differently for men and women solely because of the customer’s gender.

Question 9

European Banking Authority

Answer 9

The body that ensures effective and consistent prudential regulation and supervision across the European banking sector.

Question 10

European Insurance and Occupational Pensions Authority

Answer 10

The body that supports the stability of the financial system, transparency of markets and financial products as well as the protection of insurance policyholders, pension scheme members and beneficiaries.

Question 11

European Securities and Markets Authority

Answer 11

The body that ensures the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection.

Question 12

European System of Financial Supervision

Answer 12

The system to stabilise financial markets and strengthen the supervision of the financial sector throughout Europe.

Question 13

Financial Services Compensation Scheme (FSCS)

Answer 13

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 they have in their accounts).

Question 14

‘Help to Buy’ scheme

Answer 14

A government-backed initiative set up to help homebuyers purchase a property with as little as a 5% deposit.

Question 15

Mortgage guarantee scheme

Answer 15

This scheme enabled mortgage lenders to offer high loan-to-value loans that would otherwise present too high a risk for them. The lender could purchase a guarantee from the government on loans it made for between 80 and 95 per cent of the property price. The scheme closed to new applicants in December 2016.

Question 16

Remuneration Code

Answer 16

A code operated by the Financial Conduct Authority requiring that 50 per cent of the bonuses paid to a bank’s senior managers and others in key positions of responsibility be paid in shares.

Question 17

Transparency Directive

Answer 17

European legislation requiring financial services firms to store and provide regulated information in a specified manner.