Week 2 Flashcards

Question

Payment Systems: Debit Cards

Answer 1

Now the primary source of payment of consumer/personal transactions; Card issued at discretion of the bank and cards can be withdrawn if abused; Each transaction is authorised by the bank and can be declined; Move from signature based claim process system to chip and pin, electronic system. Trader/beneficiary credited automatically, on line. System known as EFTPoS – Electronic Funds Transfer at Point of Sale Contactless, Apple Pay etc.

Answer 2

``` Clearing House Automated Payment System Used for large amounts Based in UK (but can be in Euros) Guaranteed payment Same day Practical uses include transfer of house payments by solicitors. ```

Answer 3

Society for Worldwide Interbank Financial Telecommunication Equivalent of CHAPS but for international transactions Used by brokers, dealers security exchanges.

Answer 4

Individual to individual Typically small amounts Beneficiary must disclose banking details

Answer 5

``` Level term Decreasing term Family income Increasable term Convertible (to endowment) Renewable (without further medical evidence) ```

Answer 6

With profits NB reversionary bonus | Unit linked

Answer 7

Non profit With profit Flexible (unit linked)

Answer 8

Deferred periods Paid until return to work Predetermined % of income (typically 50% - 60%).

Answer 9

Similar to income protection, except:- Lump sum if loss of limb/eye Shorter deferred period Defined term

Answer 10

Private Medical Insurance Access to private health facilities, appointment on demand, shorter waiting times, etc NB does not cover per-existing conditions. ``` Critical Illness Cover Lump sum payable on diagnosis of specified diseases Such as? Heart attack Stroke cancer. ```

Answer 11

Offer cover for one or more of:- Accident Sickness Unemployment Known as ASU policies. Connected to debts such as loans, credit cards or mortgages. Deferred periods Maximum payout term Self employed and fixed term employees offered limited cover.

Answer 12

The likeliehood of contracting a serious illness during the term of the policy. Statistically women are more likely to contract such diseases so the cost of such policies are more expensive to women.

Answer 13

The likeliehood of dying during the term of the policy. | Statistically men die younger than women so life insurance is more expensive for men than women.

Answer 14

Insurance companies can look to reduce their potential exposure by taking out morbidity or mortality bonds.

Answer 15

Means of the utmost good faith If one party to a contract does not disclose ALL material facts at the outset the contract is voidable at the option of the injured party

Answer 16

Overdraft Credit card Term loan

Answer 17

Basically, when impact of default is high (NB not when risk is high as these loans should be declined)– such as: loan is large used to buy a specific asset – such as a house repayment is from a specific asset Typically a secured loan will be offered at a lower rate than unsecured lending (as the risk is seen as low), but there may be additional costs involved, which could be added to the loan.

Answer 18

Loans Overdrafts Mortgages- Buy to let/self build

Answer 19

Probate loans Bridging loans student overdrafts

Answer 20

Gilts – government securities, loans to the government. ’Perceived as having no risk of default’

Answer 21

loans to companies, paid annual interest and return of capital. Often secured against company’s assets

Answer 22

``` Payment (lump sum/monthly) Access to money Cost and charges Tax efficiency Reputation of provider. ```

Answer 23

Internal fraud Staff Fraud (outside of this unit). Customer Fraud External fraud Non- customer fraud

Answer 24

Largely around the application process – application to open an account (identity theft) or application for facilities, typically lending facilities Historically have been largely dominated by card fraud, cloning, unauthorised usage etc. Bank protected by robust procedures, some automated, some manual. See risk unit, three lines of defence etc.

Answer 25

Where the customer actually withdraws/transfers the funds completely within the mandate conditions. Increased by 71% in H1 2021.

Answer 26

Staff training to recognise possible APPs in branch or over the phone; On-line automated warnings when new beneficiaries created by customer; Delayed processing of unusual, initial or large transactions until customer confirmation received.

Answer 27

``` Death Mental Incapacity Bank discretion (credit account) Default Bankruptcy ```

Week 2 Flashcards

(51 cards)