Unit 1

Question 1

Who owns Banks and what are the two type of banks

Answer 1

shareholders for profit

retail and investment

Question 2

Big 5 and challenger banks

Answer 2

big 5 - Natwest, Barclays, HSBC, LLoyds, standard chartered

Challenger - Monzo, Metro

Question 3

Investment banks v Retail banks

Answer 3

Retail banks - individuals and SMEs

Investments - no deposits raise funds on markets for large corporations and government

Question 4

When was first BS

Answer 4

Birmingham in 1775

Question 5

two types of insurance providers

Answer 5

insurance companies - Aviva and AXA

Lloyds insurance market - syndicates employ underwriters to accept risk and divide it

Question 6

Credit Unions

Answer 6

Mutual owned by members
over 300 in UK
regulated on PRA and FCA

Question 7

Financial advisers

Answer 7

IFAs - can advise any products are not employed by providers to sell their products

Question 8

BoE

Answer 8

Monetary stability - MPC achieve stable prices
acts as a bank for banks
More regulatory powers in 2013

Question 9

FPC

Answer 9

survival and stability of system

supports government economic policy and reduces systemic risk

Question 10

PRA

Answer 10

Regulates providers and promotes competition

Question 11

FCA

Answer 11

separate to BoE and protects consumers

Question 12

HM Treasury

Answer 12

government sector responsible for economic policy

Question 13

Money advice service

Answer 13

Free advice for consumers

Question 14

Competition and Markets Authority

Answer 14

strengthens business competition and reduces anti competition concerns

Question 15

FOS

Answer 15

set up by parliament to settle consumer complaints

‘we wont take sides’

Question 16

FSCS

Answer 16

protection for consumer funds if providers default

85k for savers

Question 17

UK Finance

Answer 17

represents 250 members to enhance competition

Question 18

Temporary public ownership

Answer 18

08 Crisis meant banks had to buy large portions of big banks to save them
UK Financial investments set up to manage them (UKFI)

Question 19

Divestment

Answer 19

selling of parts of company to make it smaller

Question 20

Oligopoly

Answer 20

Market dominated by few large firms

Question 21

Ring fencing

Answer 21

Separating the deposits side of bank to other activities so if crisis banks cant use consumer funds in risky investments
however retail ring fenced banks may offer unattractive rates

Question 22

Financial intermediation

Answer 22

taking funds from surplus sector to give to those in deficit sector

Question 23

Financial intermediary

Answer 23

institution that facilitates lending/borrowing through financial intermediation

Question 24

Counterparties in the financial sector

Answer 24

personal
retail
corporate
public
financial

Question 25

Short term money markets v long term money markets

Answer 25

short term - banks with surplus lend to banks with deficit for short term
long term - long term bonds and equity are sold/bought

Question 26

P2P lending

Answer 26

Zopa
cuts out banking institution and connects lenders to borrowers
not protected by FSCS but since April 2014 protected by FCA

Question 27

Payday Loans

Answer 27

Very short instant cash with very high rates upwards to 1333 % APR
FCA 2015 put cost per day cap at £15