Topic pesë - External Influences on financial services providers and their products Flashcards
What topics come under POLITICAl in pestel
Competition
Consumer protection
What topics come under ECONOMIC in pestel
Changes in interest rate
Inflation rate
Competition
Housing prices
What topics come under SOCIAL in pestel
Changing Lifestyles
Unemployments rate
Demographic rates
What topics come under TECHNOLOGICAL in pestel
New delivery Methods
New products
What topics come under ENVIRONMENTAL in pestel
Sustainability
Green Investment
What topics come under LEGAL in pestel
Legislation
Regulation
Why is regulation important
Creates a safer system
Promotes confidence in the system
Protects customers from mis-selling
Provides people with information on financial products
What are the justifications for regulation
Financial institutions must have confidence in each other - Eg Insurance companies hold money in banks
The UK economy has a high export rate, so that cannot fail
Allows more confidence for people to leave money so the state doesn’t pay as much sick or injury pay
What is the cost of regulation to banks
Fees paid to FCA and PRA and levies to FOS and FSCS
Systems cost
Trained compliance staff
A provider that complies with what rules is less likely to fail
Prudential
What are the benefits to banks for regulation
Less likely to collapse
makes the provider look ethical
creates law-abiding providers
All on equal terms as all have same regulations
Benefits bigger banks though
recent regulation changes in 2017
Pressure to reduce pension regulation from - the Work and Pensions Committee
House of lords said FCA should tackle financial exclusion
\What are regulations to smaller banks
Barriers to entry
What happened to regulation in 2014
CMA took over the role of the OFT
What does the information commissioner do
makes sure the 2018 data protection act is followed
What does the 2018 data protection act do
Allows consumers to access public information and that private data is protected
What bank said “build a bank that’s based on doing the right thing
for customers”
Virgin money Uk
What are the 2 main banking codes of conduct
the Banking Conduct of Business Sourcebook (BCOBS) and the Standards of Lending Practice
What is in the BCOBS
Statutory banking conduct regime
Provides rules for banks that have deposits with individuals and small businesses
rules:
Must communicate to customers
requirement to provide a prompt after-sales service
right for customer to cancel a product after purchase
What is in the standards of lending practice
Voluntary and cover the sales of credit
Doesn’t include mortgages
Comprise minimum standards for banks dealing with customers
What bank does the government hold shares in
Natwest - over 50% of their shares
Means government is involved in finance through holding shares
If a question mentions the word “real” most of the time whats the answer
Inflation
How does inflation effect providers
Low rate- People happy to borrow and invest
High rate - Less people want to borrow, want savings to be index-linked
What does index-linked means
Rises and falls with the rate of inflation
