finance unit three- topic three

?
what is PESTEL analysis?
political, economic, social, technological, environmental and legal
1 of 53
what are political factors?
the various ways in which policies of a govt affect the products and services offered by financial providers and what effects these have on consumers
2 of 53
what is the aim of regulation in the financial services market?
to maintain a sustainable global financial services industry and properly protect customers' interests
3 of 53
why is it EU policy that there should be more competition between providers?
so that customers can choose products and services that meet their needs
4 of 53
what does financial services regulation cover?
covers the way in which providers conduct their business, including matters such as the transparency of their pricing, quality of the advice they provide and how they repsond to complaints
5 of 53
why regulate banking and finance?
protects customers, a well regulated system will be more sustainable, it requires providers to manage their business prudently
6 of 53
what are the three bodies that replaced the FSA after the 2007-08 crisis?
the FCA, the PRA and the Bank of England's Financial Policy Committee
7 of 53
what is consumer credit?
credit advanced to consumers for the purchase of goods and services
8 of 53
what is the role of the FOS?
its role is to investigate customer complaints and resolve disputes between consumers and providers
9 of 53
how is teh FOS financed?
by an annual levy paid by all providers covered by the scheme and case fees paid by providers if complaints about them reaches a certain amount
10 of 53
what is the role of the CMA?
it aims to encourage stronger competition for the benfit of consumers and to prevent anti-competitive behaviour in regulated industries
11 of 53
what are examples of people deemed to be socially excluded?
people with mental/physical disabilities, people with poor basic skills and people with a low income
12 of 53
what is social inclusion?
ensuring all individuals and groups in society have access to certain rights
13 of 53
what is financial inclusion?
the delivery of financial services at affordable cost to disadvantaged segments of society
14 of 53
why does lack of financial literacy lead to financial exclusion?
they may not know how to manage their finances, or be aware of the different products that could help their financial wellbeing
15 of 53
what is one measure of financial exclusion?
the number of people without a bank account
16 of 53
what is the universial banking policy encouraged by the government to reduce financial exclusion?
a committment by the banks and building societies to offer stripped down basic accounts to anyone regardless of their circumstances
17 of 53
what has the government done to reduce financial exclusion?
made Post Office accounts available so people cashing their benefits can use a bank account at the same place
18 of 53
what factors lead to market failure?
when consumers aren't fully informed about the products, there can eb no guarantee that free competition and market forces will deliver best products at best costs
19 of 53
what is information failure?
a situation in which consumers aren't fully informed about a product
20 of 53
what are the costs of regulation to the provider?
they must spend more on staff training, compliant depts and leveies to fund regulatory and consumer protection bodies. they may also have to pay fines and compensation if something goes wrong
21 of 53
what are the costs of regulation to the provider's stakeholders?
the companny will accept lower profits meaning less dividends for shareholders, it may negotiate staff redundundancies and may freeze staff salaries and bonuses
22 of 53
what is inflation?
a rise in prises, which means the purchasing power of money falls
23 of 53
what will the Bank of England do if inflation is above the targeted 2%?
increase the Bank rate
24 of 53
how does increasing the bank rate help to control inflation?
people won't take out loans for "big ticket" items as they may be put off by the higher interest rate. lower spending will reduce demand for products forcing businesses to lower prices
25 of 53
why were banks and building societies willing to offer equity loans before the crisis?
the loan was secured on the value of the property they could repossess if the borrower didn't repay
26 of 53
why did the booming housing market lead to an increased demand for other financial products?
borrowers needed to take out buildings and contents insurance, the also bought life assurance to make sure their families wouldn't have to move if they died
27 of 53
what caused the house price bubble to burst?
the collapse of the US sub prime housing market
28 of 53
what was the impact of the credit crunch on peoples' personal finances?
people had to reduce personal debts, increase regular saving, make an emergency fund and avoid any new debts
29 of 53
what are marginal borrowers?
people who are only just able to repay debts even at a lower interest rates and will be unable to pay if they increase
30 of 53
who was worst affected by the financial crsis?
peopel who used high loan to value mortgages to purchase their homes and people who used equity withdrawal
31 of 53
why would an increase in interest rates lead to a fall in the value of the stock market?
the demand for goods and services will fall meaning that sales revenues will fall- corporate profits will be squeezed making shares less attractive
32 of 53
what are the four main sources of demand?
consumer demand, corporate demand, government spending and demand for exports
33 of 53
what are the two main government objectives?
monetary and fiscal policy
34 of 53
what is monetary policy?
the mainpulation of interest rates to maintain low inflation
35 of 53
what is fiscal policy?
how the government manages the amount of money it raises in taxation, the amount it borrows on financial markets and the overall amount it spends
36 of 53
how is government borrowing funded?
gilts
37 of 53
what are exchange rates?
the price of one currency in terms of another
38 of 53
what is globalisation?
the integration of economies, industries, markets, cultures and policy making around the world
39 of 53
what is the subprime market?
lending to and borrowing by consumers with untested or poor credit history
40 of 53
what is a floating exchange rates?
where the value of a currency is determined by the supplya nd demand for it
41 of 53
what happens to trade if the pound is devalued?
demands for exports will increase as it will be cheaper to buy UK products. the cost of buying products from other countries would be increaseed and inflation would rise
42 of 53
if interest rates in other countries are higher than the UK what happens to the value of the pound?
it falls as demand for sterling falls
43 of 53
hopw can exchange rates affect foreign investments?
lack of stability will lead to a fall in investment
44 of 53
what is multiculturalism?
taking account of different cultural needs and expectations of the various ethnic groups that make up society
45 of 53
what is consumer culture?
where the buyinga nd selling of goods and services is the most important social and economic activity
46 of 53
why is age an important demographic for providers to consider?
the financial products that peopel need at the different life stages are very different
47 of 53
why must young peopel be interested in the sustainability of their finances?
the population is aging meaning that it's less likely the state will be able to provide adequate pensions for everyone
48 of 53
what is known as the digital divide?
economic inequality casued by lack of knowledge of or access to internet technology
49 of 53
how are providers affected by environmental factors?
providers rae encouraged by regulators, governmental and non governmental agencies, environmental campaigners and pressure groups among others, to make their products more environmental friendly
50 of 53
what is green technology?
processes and products that are renewable, sustainable and/or non- polluting, such as energy from tidal power
51 of 53
what is an EU relation?
a legislation act of teh EU that becomes immediately enforcable by law in all member states simultaneously
52 of 53
what is an EU directive?
a legislative act of the EU which requires member states to achieve a particular result without dictating the means of achieving that result
53 of 53

Other cards in this set

Card 2

Front

what are political factors?

Back

the various ways in which policies of a govt affect the products and services offered by financial providers and what effects these have on consumers

Card 3

Front

what is the aim of regulation in the financial services market?

Back

Preview of the front of card 3

Card 4

Front

why is it EU policy that there should be more competition between providers?

Back

Preview of the front of card 4

Card 5

Front

what does financial services regulation cover?

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all topic three resources »