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Finance Unit 3 > Topic 7 - The Impact of Recent Changes > Flashcards

Topic 7 - The Impact of Recent Changes Flashcards

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1
Q

when the Bank of England became independent of the government in 1997, what were they tasked to do

A

set the monetary policy to ensure monetary stability

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2
Q

when was the Bank of England given responsibility for setting the bank rate

A

1998

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3
Q

why did the monetary policy committee reduce the bank rate to 0.5% in 2009

A

to stimulate the economy following the global financial crisis

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4
Q

why was the bank rate is 1980, 1990, 1998 and 2009?

A

17%

  1. 5%
  2. 5%
  3. 5%
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5
Q

when did the governor of the Bank of England say the bank rate would increase

A

if unemployment fell to below 7%

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6
Q

what is the boomerang generation

A

young adults leave their parents home but have o return because they cannot afford to rent/buy their own home

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7
Q

what factors have affected home affordability

A

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

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8
Q

what is the European System of Financial Supervision (EPFS)

A

what the union used to achieve the aim of making a stable secure and efficient financial market

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9
Q

what 4 parties make up the European System of Financial Supervision

A

the European Systematic Risk Board

the European Banking Authority

the European Securities and Market Authority

the European Insurance and Occupational Pensions Authority

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10
Q

what does the European Systematic Risk Board monitor

A

the financial sector to identify potential problems that could lead to future crisis’

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11
Q

what does the European Banking Authority (EBA) do

A

ensure prudential regulation and supervision across the European banking sector

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12
Q

what does the European Securities and Market Authority (ESMA) ensure

A

the integrity, transparency, efficiency and functioning of securities markets as well as enhancing investor protection

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13
Q

what does the European Insurance and Occupational Pensions Authority (EIOPA) do

A

supports the stability of the financial system, transparency of markets and products as well as protection of insurance policy holders, pension scheme members

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14
Q

what is the EU commissioner trying to achieve

A

to use the European regulatory framework to coordinate the financial authorities of each member country and to harmonise rules

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15
Q

what have the recent changes in the financial services industry led to

A

safer financial system for consumers, with greater protection and increased transparency of operations and competitive fees

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16
Q

what did the Deposit Guarantee Scheme do (EU REGULATION)

A

the FSCS compensation cover, raised the amount from £20000 to £85000

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17
Q

what is the EU Gender Directive (EU REGULATION)

A

equal treatment between men and women in the access to and supply of goods and services

eg) car insurance and annuity rates

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18
Q

what is the Transparency Directive (EU REGULATION)

A

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

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19
Q

what was then the later further requirement of the Transparency Directive (EU REGULATION)

A

have to make account fees and charges clear so that consumers can compare accounts on a like for like basis

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20
Q

what is the Capital Requirements Directive (EU REGULATION)

A

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

21
Q

what is Capital Requirements Directive provisions for bank staff remuneration

A

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

22
Q

what does the Banking Conduct of Business Sourcebook require (UK LEGISLATION)

A

that banks should be fair, clear and not misleading in communication with consumers - combatting information failure

23
Q

what does the Approved Persons Regime ensure (UK LEGISLATION)

A

ensures that all senior bankers and staff providing regulated financial advice are ‘fit and proper’

24
Q

what is assessed by the Approved Persons Regime to ensure provided of advice are fit and proper

A

honesty, integrity and reputation

competence and capability

financial soundness

25
Q

why may new legislation and regulation have a negative impact on consumers?

A

if providers need to raise fees on borrowing and reduce the returns on savings to pay for changes

26
Q

in order to create, monitor and adjust their plans, what sort of advice and information do consumers need

A

free, unbiased, independent and reliable

27
Q

where can information be found

A 
Internet 
brochures
in person 
citizens advice
national debtline
stepchange
radio/television/newspapers
government 
money advice service
28
Q

why has the FCA said that independent financial advisers can no longer recieve commission from product providers

A

so that advisers cannot be tempted to recommend products that offer them higher commission which may not be the best choice for the customer

29
Q

what must providers do when selling packaged bank accounts

A

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

30
Q

what % of households have Internet access

A

84

31
Q

what % of adults have accessed the Internet every day

A

76

32
Q

what % of adults have used a computer everyday

A

73

33
Q

what % of adults have accessed the Internet via mobile phone

A

58

34
Q

what % of adults have bought goods online

A

74

35
Q

what % of adults have accessed their bank account online

A

53

36
Q

what 6 things are those with Internet access able to take advantage of

A

online and mobile banking

apps and calculators for budgeting

faster payments

new sources of borrowing

product comparison sites

alternative payment systems

37
Q

what is Bitcoin

A

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

38
Q

what 6 things have lead to changes in providers, products and services

A

regulation

super complaints

market investigations

economic conditions

ageing population

changes to demography

39
Q

what are the 5 big banks

A

RBS

HSBC

Lloyds

Barclays

Santander

40
Q

what percentage of all bank accounts do the big 5 hold

A

90%

41
Q

what does the Current Account Switch Service set up by the Payments Council ensure

A

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

42
Q

it is backed by the Current Account Switch Guarentee, what is this

A

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

43
Q

what is a New Individuals Savings Account (NISA)

A

encourages savings by offering a tax free return - good for pensions

44
Q

research shows that a typical family can afford less than what % of suitable homes

A

less that 10% in half the country

45
Q

what is the Help to Buy equity loan

A

borrowers only need a 5% deposit as government lends 20% of purchase price on a new build and lenders put up 75%

46
Q

what is the help to buy mortgage Guarentee scheme

A

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

47
Q

what is the property limit on the help to buy scheme

A

properties with a maximum price of £600000

48
Q

what is the conservative lib dem coalition help to buy ISA

A

for every £200 people save towards their first home, the government give an extra £50 up to a maximum of £3000

Finance Unit 3 (7 decks)

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