Topic 7 - The Impact of Recent Changes Flashcards
when the Bank of England became independent of the government in 1997, what were they tasked to do
set the monetary policy to ensure monetary stability
when was the Bank of England given responsibility for setting the bank rate
1998
why did the monetary policy committee reduce the bank rate to 0.5% in 2009
to stimulate the economy following the global financial crisis
why was the bank rate is 1980, 1990, 1998 and 2009?
17%
- 5%
- 5%
- 5%
when did the governor of the Bank of England say the bank rate would increase
if unemployment fell to below 7%
what is the boomerang generation
young adults leave their parents home but have o return because they cannot afford to rent/buy their own home
what factors have affected home affordability
increase of rental prices by 8% since 2005
decrease in average earnings from £12.25 to £11.21 since 2009
increase in multiples of income that first time buyers paid for a home from 2.7 in 1996 to 4.4 in 2013
what is the European System of Financial Supervision (EPFS)
what the union used to achieve the aim of making a stable secure and efficient financial market
what 4 parties make up the European System of Financial Supervision
the European Systematic Risk Board
the European Banking Authority
the European Securities and Market Authority
the European Insurance and Occupational Pensions Authority
what does the European Systematic Risk Board monitor
the financial sector to identify potential problems that could lead to future crisis’
what does the European Banking Authority (EBA) do
ensure prudential regulation and supervision across the European banking sector
what does the European Securities and Market Authority (ESMA) ensure
the integrity, transparency, efficiency and functioning of securities markets as well as enhancing investor protection
what does the European Insurance and Occupational Pensions Authority (EIOPA) do
supports the stability of the financial system, transparency of markets and products as well as protection of insurance policy holders, pension scheme members
what is the EU commissioner trying to achieve
to use the European regulatory framework to coordinate the financial authorities of each member country and to harmonise rules
what have the recent changes in the financial services industry led to
safer financial system for consumers, with greater protection and increased transparency of operations and competitive fees
what did the Deposit Guarantee Scheme do (EU REGULATION)
the FSCS compensation cover, raised the amount from £20000 to £85000
what is the EU Gender Directive (EU REGULATION)
equal treatment between men and women in the access to and supply of goods and services
eg) car insurance and annuity rates
what is the Transparency Directive (EU REGULATION)
the requirement of storing and providing regulated information eg( financial reports - should mean that they are less likely to hide deficits in their balance sheets
what was then the later further requirement of the Transparency Directive (EU REGULATION)
have to make account fees and charges clear so that consumers can compare accounts on a like for like basis
what is the Capital Requirements Directive (EU REGULATION)
specifies the liquid assets a provider must hold to ensure they will be able to meet the withdrawal needs of customers, to be able to operate when external funding is not available
what is Capital Requirements Directive provisions for bank staff remuneration
requires that 50% of bonuses paid to a banks senior staff must be paid in the form of shares
means that banks have a personal financial interest in the long term sustainability of the provider
also put a 2:1 cap on bonuses: bankers can receive a maximum of 100% of their base salary as a bonus - to reduce risk taking of bankers
what does the Banking Conduct of Business Sourcebook require (UK LEGISLATION)
that banks should be fair, clear and not misleading in communication with consumers - combatting information failure
what does the Approved Persons Regime ensure (UK LEGISLATION)
ensures that all senior bankers and staff providing regulated financial advice are ‘fit and proper’
what is assessed by the Approved Persons Regime to ensure provided of advice are fit and proper
honesty, integrity and reputation
competence and capability
financial soundness
why may new legislation and regulation have a negative impact on consumers?
if providers need to raise fees on borrowing and reduce the returns on savings to pay for changes
in order to create, monitor and adjust their plans, what sort of advice and information do consumers need
free, unbiased, independent and reliable
where can information be found
Internet brochures in person citizens advice national debtline stepchange radio/television/newspapers government money advice service
why has the FCA said that independent financial advisers can no longer recieve commission from product providers
so that advisers cannot be tempted to recommend products that offer them higher commission which may not be the best choice for the customer
what must providers do when selling packaged bank accounts
check that consumers will be eligible to claim for each policy in the package and share the info with customer
provide an annual statement and explain how to claim each of the benefits
ensure that the advisers who recommend the packaged accounts check if each policy is suitable and tell consumers if some are not
what % of households have Internet access
84
what % of adults have accessed the Internet every day
76
what % of adults have used a computer everyday
73
what % of adults have accessed the Internet via mobile phone
58
what % of adults have bought goods online
74
what % of adults have accessed their bank account online
53
what 6 things are those with Internet access able to take advantage of
online and mobile banking
apps and calculators for budgeting
faster payments
new sources of borrowing
product comparison sites
alternative payment systems
what is Bitcoin
a virtual currency which in not linked to other currencies and not backed by a government
it is collected by a mathematical process online
can unlock and collect more if they discover secret codes
not regulated and difficult to trace
what 6 things have lead to changes in providers, products and services
regulation
super complaints
market investigations
economic conditions
ageing population
changes to demography
what are the 5 big banks
RBS
HSBC
Lloyds
Barclays
Santander
what percentage of all bank accounts do the big 5 hold
90%
what does the Current Account Switch Service set up by the Payments Council ensure
that people are able to switch accounts quickly, taking no more than 7 days and transfer all of the existing balance, income and outcome payments
it is backed by the Current Account Switch Guarentee, what is this
will refund consumers any interest they lose or pay and any charges they may incur if it goes wrong
also a 13 month redirection device
what is a New Individuals Savings Account (NISA)
encourages savings by offering a tax free return - good for pensions
research shows that a typical family can afford less than what % of suitable homes
less that 10% in half the country
what is the Help to Buy equity loan
borrowers only need a 5% deposit as government lends 20% of purchase price on a new build and lenders put up 75%
what is the help to buy mortgage Guarentee scheme
mortgage lender purchase a Guarentee on mortgage loans
lenders offer mortgage that are 95% of purchase price with Guarentee so consumers only need 5% deposit
what is the property limit on the help to buy scheme
properties with a maximum price of £600000
what is the conservative lib dem coalition help to buy ISA
for every £200 people save towards their first home, the government give an extra £50 up to a maximum of £3000
