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Libf UNIT 4 > Topic Juan - The financial system > Flashcards

Topic Juan - The financial system Flashcards

1
Q

What services can retail-banks provide

A

Money transmission- People pay and get money
Savings and investments
Lending
Insurance

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2
Q

What are the main 4 retail - banks

A

Natwest Group
lloyds banking group (LBG)
Barclays
HSBC

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3
Q

What are 5 challenger banks

A

Co - op banking group
Virgin Bank LTD
Metro Bank
Handelsbanken
Tesco Banks

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4
Q

What do investment banks provide

A

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

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5
Q

What is the Lloyd’s insurance market

A

Based in the city of London, made up of members who hire experts in risk to then offer out insurance.

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6
Q

What are the main info about credit unions

A

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

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7
Q

Main info about friendly society’s

A

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

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8
Q

What is a pension fund

A

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.

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9
Q

What are the 3 types of financial advisors

A

Independent
restricted (Products)
restricted(Company)

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10
Q

What are the bank of England’s 5 main features

A

Achieving monetary stability
Achieving financial stability
Acting as banker to the banks
Issuing Uk bank notes
Managing the banks gold and foreign exchange reserves.

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11
Q

How sets the rules for banks

A

The bank of England

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12
Q

What does the FPC do

A

Identifies Systematic risk
Supports the economic policy of the government

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13
Q

What does the PRA do

A

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

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14
Q

What is the PRA’s 3 objectives

A

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

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15
Q

What is the FCA’s 3 objectives

A

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.

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16
Q

What is the FCA responsible for

A

Responsible for fighting financial crime, it detects and counters money laundering

Grants licences to companies who offer credit and do savings

17
Q

What does the Treasury do

A

Acts to create fiscal policy

Deals with customer complaints

18
Q

What is Money Helper

A

Formally known as the money advice service. Set up by the government so they could give out free financial advice to everyone.

19
Q

what is the CMA’s Roles

A

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

20
Q

What are trade associations

A

aims to ‘enhance competitiveness, support customers and facilitate innovation’.

21
Q

What are financial trends after the financial crisis

A

Public Ownership
Increased Concentration
Divestment
Less competition
Ring - Fencing

22
Q

What is ring-fencing with banks

A

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.

23
Q

What are the 3 sectors with individuals and comapanies

A

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

24
Q

What is the personal sector counterparty

A

Borrow for normal things like mortgages, don’t take a lot of risk

25
Q

What is the retail sector counterparty

A

same as the personal sector, but include small to medium sized businesses who are borrowing small and medium amounts of money

26
Q

What is the commercial and corporate sector counterparty

A

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

27
Q

What is the public sector counterparty

A

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.

28
Q

What is the financial sector counterparty

A

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

29
Q

What are banks 2 sources of funding

A

Customer deposits
Short-term loans
Long - term loans
sale of assets

30
Q

How do banks use their funds

A

Lending money
Trading on financial markets
Purchasing physical assets
Paying their opperational costs

31
Q

Is Peer to Peer lending regualted

A

FCA regulated since 2014
No FSCS

32
Q

The advantages of P2P lending

A

Lower rates than a traditional bank
The risk is small as funds are diversified

33
Q

How does P2P lending work

A

Someone deposits their money which is then lent to multiple people who pay them it back over time

34
Q

How long will a payday loan stay on someones record for

A

6 years

35
Q

The benefits of mobile banking

A

Pay people and check your balance
Change your cash machine limit
freeze card

36
Q

How many credit unions are in the uk

A

Over 300

Libf UNIT 4 (18 decks)

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