Unit 3 - Bank Customers Flashcards by Farhana Begum

What is a firm that holds and administers property or assets for the benefit of a third party?

Trustee

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What is the financial product that would be the most suitable for a company which needs to boost its liquidity position?

Overdraft

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Optichannel banking is a type of distribution channel which is a:

tailored approach which determines the best number of channels for each customer

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What is not correct about basic bank accounts?

Most customers begin with a basic account before moving to a current account.

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What is the training tool to help a banks frontline staff to manage initial conversations with vulnerable customers?

TEXAS

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What are types of customers?

Personal customers, Sole traders, Partnerships, Ltd Companies, Clubs, associations and societies, Trustees

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What is core banking services?

Accept deposits from savers, grant loans to borrowers, act as an agent for payments, providing other financial products & services including insurances & financial advice

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What are green products & services?

Green mortgages-energy efficient homes
Green loans- e.g. purchase of low carbon emission car
Green bonds- funds used to fund environmentally friendly projects

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What does the Consumer Credit Act 2006 cover?

-Information to customers before agreement
-Additional protection for credit card purchases between £100 & £30,000
- Procedures for default, termination
- Method of calculating APR

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What is a Credit Score?

It’s a 3 digit number used by lenders to assess how likely a borrower is to repay the debt- higher the score, the less risky a borrower is

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What is FICO score?

Standard measure used: based on 5 categories:
1. Payment history
2. Amounts owed
3. Length of credit history
4. New credit
5. Credit mix

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What is a bank current account?

Is normally used regularly, and it is the main account that customers use to manage their money.

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What are deposit services & products?

Available to people who need to manage their day to day incomes & expenditures & who want to save their surplus funds.
- Main products:
1. Current accounts
2. Savings Accounts
3. Investment accounts

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Case study- March 2023 what bank offers 4 current account products?

Lloyds Bank- 1 is basic & other 3 are “high class accounts”: designed for people with income above a certain threshold & require a certain amount of £ to be paid in each month
1. Classic
2. Club Lloyds
3. Silver account
4. Platinum

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What is the maximum amount that a customer can invest in an ISA each year is (2021/22 tax year)

£20,000

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An equity release loan would be most suitable for a customer who wants to:

Raise money by freeing up some of the capital that is locked into their property

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Level Term assurance can be useful for a customer who is wants to:

Provide security for dependants up to a certain age if the customer dies during the term of the policy

1 way of empathising with a customer is by:

Saying ‘ that must have been really frustrating for you’

If a complaint is not resolved between a bank and its customer, the customer may be entitled to refer the complaint to which regulatory body:

FOS ( Financial Ombudsman Service)

What are examples of vulnerable customers?

Low income/debt
Severe/long term illness
Low literacy, numeracy & financial capability skills

In terms of supporting vulnerable customers, what option has been found to be the most effective method in helping them?

Sign posting to charitable organisations that can help them

Having financial capability is NOT:

About becoming a financial expert & passing exams

What does ISA stand for?

Individual Savings Account

An Islamic mortgage is a mortgage that is compliant with Shariah law. Shariah mortgages are typically referred to as:

Home purchase plans

Investment products include various securities-related products, such as mutual funds. These are also known as:

Unit Trusts

EY (2018) suggests a way of segmenting customers in terms of how they feel about new technologies which could have implications for the way they perceive their banking experience. Which is NOT 1 of the 8 categories of customers?

Burdensome & Proud

According to research cited in UK newspaper The Times in June 2019. In the 7 years between 2012 & 2019, how many high street branches in the UK were closed?

2145

If a customer pays in a cheque at a Post Office, the cheque clearing timescale will increase by at least 1 additional day. This is because:

The Post Office is not a bank & it has to send the cheque to the customers bank before it can be entered into the clearing system.

Using images of cheques instead of handling the physical cheques significantly speeds up the cheque clearing process. With a paper-based system, how many days for a cheque to clear?

6 weekdays ( excluding bank holidays)

What is a standing order?

An instruction we give to our bank to authorise a payment for a set amount usually on a regular basis to be made to another bank

What’s the benefit of Private Ltd Companies?

Many SMEs are PLC as it’s a separate legal entity from its shareholders ie if cust takes legal action against the business its only company itself

What type of companies are Corporates?

Large ltd companies ie Public Ltd and they can offer shares to the public

What are 3 main types of lending products?

1. Credit cards 2. Personal loans 3. Mortgages

What are most personal lending regulated under?

Products in uk and eu are regulated under the consumer credit regulation

What’s the rule on Islamic mortgages?

Shariah law prohibits the payment of riba/interest. Islamic banks have to develop products that don’t charge interest.

How many types of Islamic mortgages are there?

3 ( Ijara, Musharaka, Murabaha )

What is Ijara ( lease, 1 of Islamic Mortgages) ?

The bank buys property & leases to client for fixed term @ agreed monthly cost; when term is up the bank transfers full ownership to client.

What is Musharaka(partnership, 1 of Islamic mortgages?

Co-ownership agreement where cust &bank each owns a share of property. Each time cust makes repayment (part capital/rent) they’re buying more banks share which reduces rent and at end the customer owns bank shares.

What is Murabaha(profit, 1 of Islamic mortgages)?

Bank buys property on behalf of customer & sells it to them for a higher price than it paid, repaid by cust in equal instalments over fixed term

What are examples of green products/services?

1. Green mortgages- cust buying energy efficient homes. 2. Green loans- personal banking cust to buy electric cars etc. 3. Green business loans to help corporate cust for low carbon projects 4. Green bonds, investment to fund clear water etc

Who ensures banks are not mis-selling & to comply with regulations?

The Financial Conduct Authority