Topic Juan - The financial system Flashcards
What services can retail-banks provide
Money transmission- People pay and get money
Savings and investments
Lending
Insurance
What are the main 4 retail - banks
Natwest Group
lloyds banking group (LBG)
Barclays
HSBC
What are 5 challenger banks
Co - op banking group
Virgin Bank LTD
Metro Bank
Handelsbanken
Tesco Banks
What do investment banks provide
Lend large amounts to companies
Help them raise money via shares and bonds
advise company’s on merges and takeovers
Deal in the financial market and make money for themselves
What is the Lloyd’s insurance market
Based in the city of London, made up of members who hire experts in risk to then offer out insurance.
What are the main info about credit unions
Members have a common bond
around 300 in the uk
Main products are savings accounts and loans
Promote affordable borrowing and lending
Owned by members
Main info about friendly society’s
Owned by members
Provides loans using peoples savings
Mostly centred around a town/village
Smaller basis, loans up to 1k
Regulated by fca,pra,fscs ect
What is a pension fund
Specialises in investing people’s pension contributions, which will give them an income when they retire
In the long term so can build someone up a lot of assets
Deal in financial markets so they can get the most returns, to build them a fund.
What are the 3 types of financial advisors
Independent
restricted (Products)
restricted(Company)
What are the bank of England’s 5 main features
Achieving monetary stability
Achieving financial stability
Acting as banker to the banks
Issuing Uk bank notes
Managing the banks gold and foreign exchange reserves.
How sets the rules for banks
The bank of England
What does the FPC do
Identifies Systematic risk
Supports the economic policy of the government
What does the PRA do
Responsible for the regulation and supervision of financial providers
It contributes to the stability of the UK financial system by promoting the safety and soundness of the firms
What is the PRA’s 3 objectives
1)To promote safety and soundness to providers
2)Insurance providers make sure the policy is correct to them
3)to facilitate effective competition in financial services
What is the FCA’s 3 objectives
1)To secure an appropriate degree of protection for consumers.
2) To protect and enhance the integrity of the UK financial system.
3) To promote effective competition in the interests of consumers.
What is the FCA responsible for
Responsible for fighting financial crime, it detects and counters money laundering
Grants licences to companies who offer credit and do savings
What does the Treasury do
Acts to create fiscal policy
Deals with customer complaints
What is Money Helper
Formally known as the money advice service. Set up by the government so they could give out free financial advice to everyone.
what is the CMA’s Roles
Investigating mergers and anti-competition activities
Prosecuting providers that run cartels
Ensures that people can change providers easily
Stopping a bank monopoly and having competition
What are trade associations
aims to ‘enhance competitiveness, support customers and facilitate innovation’.
What are financial trends after the financial crisis
Public Ownership
Increased Concentration
Divestment
Less competition
Ring - Fencing
What is ring-fencing with banks
Bank gets split into 2 bodys
-One does current accounts and savings and usual banking
- The other does the risky investments
Means that if investments go wrong people aren’t affected.
What are the 3 sectors with individuals and comapanies
The surplus sector - Have money left over to saver
The Deficit sector - Don’t have enough money and needs to borrow
The balanced sector - Doesn’t save or borrow
What is the personal sector counterparty
Borrow for normal things like mortgages, don’t take a lot of risk
What is the retail sector counterparty
same as the personal sector, but include small to medium sized businesses who are borrowing small and medium amounts of money
What is the commercial and corporate sector counterparty
Larger businesses and companies deposit bigger amounts of money into banks and also use fund management services. They take out loans for a variety of reasons - to finance new stock or buy long - term investments/equipment. Very large companies borrow very high amounts from a variety of banks
What is the public sector counterparty
The government and other public sector bodies receive and pay money via bank accounts. They borrow money from the general public and via the stock exchange to finance deficits from public spending.
What is the financial sector counterparty
The financial providers will borrow money from each other and lend between to adjust liquidity and cash. They also lend and borrow to adjust their risk profiles according to circumstances. Other examples are life insurance companies, which purchase a wide range of securities, and fund managers, who make investments on behalf of their clients
What are banks 2 sources of funding
Customer deposits
Short-term loans
Long - term loans
sale of assets
How do banks use their funds
Lending money
Trading on financial markets
Purchasing physical assets
Paying their opperational costs
Is Peer to Peer lending regualted
FCA regulated since 2014
No FSCS
The advantages of P2P lending
Lower rates than a traditional bank
The risk is small as funds are diversified
How does P2P lending work
Someone deposits their money which is then lent to multiple people who pay them it back over time
How long will a payday loan stay on someones record for
6 years
The benefits of mobile banking
Pay people and check your balance
Change your cash machine limit
freeze card
How many credit unions are in the uk
Over 300
