QFA Investments

• Functions of the financial services market


  • Collection and channelling of funds
  • Provision of payment systems
  • Provision of liquidity
  • Managing investment risk
  • Maturity transformation
  • Risk diversification
• Collection and channelling of funds

  Financial services providers collect savings which they then invest or lend, at a margin, to individuals, businesses and the Government who require extra funds
• Provision of payment systems

  Customers can pay bills using standing order, direct debit, credit/debit card, cheque or draft, as well as mobile banking apps and online banking
• Provision of liquidity


  Matching the differing needs of depositors who require immediate access or are willing to commit funds for a fixed period, and borrowers who require short-term or long-term money
• Managing investment risk


  Financial services can be used to manage risks such as exchange rate risk and interest rate risk
• Maturity transformation


  The ability to turn short-term deposits into longer-term loans, a key service provided by financial intermediaries
• Risk diversification


  Financial institutions can spread risk across individuals or entities, reducing the potential impact to investors of the failure of one company
• Key participants in the Irish financial services market

  • Central Bank of Ireland
  • Financial institutions (banks, building societies, credit unions, etc.)
  • Financial advisers
  • Consumers of financial services
• Central Bank of Ireland

  Undertakes key functions including ensuring inflation targets are met, promoting financial stability, providing consumer protection, regulating financial institutions, and providing a high quality regulatory framework
• The Central Bank of Ireland has enforcement powers
• Financial institutions


  Banks, building societies, credit unions, etc. that provide financial services to consumers
• Financial advisers


  Provide advice and recommendations to consumers on financial products and services
• Risk spreading


  A financial institution can spread risk across individuals or entities
• The key participants in the Irish financial services market are: The Central Bank of Ireland, European Central Bank (ECB), Retail Banks, Insurance Companies, Intermediaries, Investment Firms, Credit Unions
• Central Bank of Ireland

  • Ensuring that the Euro system inflation targets are met
  • Promoting stability in the financial system
  • Providing protection to the consumer of financial services
  • Regulating the financial institutions with enforcement actions
  • Providing a high quality regulatory framework
  • Providing efficient and effective payment and settlement systems as well as currency services
  • Providing robust independent economic advice
• The Central Bank of Ireland does not set Irish interest rates due to the participation of Ireland in the euro. Euro interest rates are set by the European Central Bank (ECB) for the whole eurozone
• European Central Bank (ECB)


  • Created as the Central Bank for the countries participating in the euro currency
  • The governor of the Central Bank of Ireland is a member of the decision-making council of the European Central Bank (ECB)
  • Influencing liquidity and interest rates to achieve the objective of price stability
  • Sets the ECB lending interest rate called the refi (short for refinancing) rate which is the interest rate at which the ECB lends to banks in the eurozone
• Retail Banks


  • Provision of deposit accounts, current accounts, credit and debit cards, mortgages, personal loans and payments/funds transfer
  • Often provide other related financial services, such as insurance or investment intermediary services
• Types of insurance companies

  • General insurance companies
  • Life assurance companies
• General insurance


  Non-life insurance, as it does not involve insuring a life, that is, the proceeds of a policy are not paid out on someone's death
• Life assurance companies


  • Offer life assurance, pensions, ill health, savings and investment policies
  • Invest long-term savings mainly in stocks and shares, bonds and property, on behalf of their customers
• Main types of intermediaries

  • Insurance intermediaries
  • Mortgage intermediaries
  • Deposit brokers
  • Investment intermediaries
• Investment Firms


  • Provide investment advice, arrange investments, and manage investment portfolios for a wide range of investors
  • Able to provide a wider range of services than Investment intermediaries
• Credit Unions


  • Financial co-operative or mutual organisation structured as a limited liability company set up to provide savings and loan services for its own members
  • Members are shareholders in the credit union, and they may also place deposits with it
  • Members share in the profits of the credit union through the addition of dividends to their share account
• Admission to membership of a credit union


  • Following a particular occupation
  • Residing or being employed in a particular locality
  • Being employed by a particular employer or having retired from employment with a particular employer
  • Being a member of a bona fide organisation or being otherwise associated with other members for a purpose other than that of forming a credit union
  • Any other common bond approved by the Registrar of Credit Unions
• Additional financial services provided by some credit unions

  • Insurance intermediary services
  • Online banking
  • Current accounts
  • ATM services
  • Credit Union Mortgages
• Main financial services provided by financial services providers to consumers

  • Deposit Accounts
  • Current Accounts
  • Overdrafts
  • Credit and Charge Cards
  • Debit Cards
  • Housing Loans
  • Personal Loans
  • Leasing
  • Foreign Exchange
  • Insurance Policies
  • Long-Term Savings, Investment and Pensions
  • Insurance and Investment Intermediary Services
  • Settling Transactions - Payment Systems/Money Transmission
• Deposit Accounts


  • Consumers with surplus funds can place them with deposit taking financial institutions such as banks and credit unions for a fixed or open-ended period to earn a specified rate of interest
  • Used as a short-term secure savings facility, readily accessible emergency or rainy-day fund, or for longer term investment where the investor does not want to take any capital risk
• Current Accounts


  • Bank account which can be used by the account holder to draw a cheque on or pay funds by electronic transfer to another person through the clearing system
  • Funds do not ordinarily earn interest, although some banks do offer interest on current accounts which stay in credit at a certain specified minimum level
  • Transactions are usually charged for on the basis of a scale of fees
  • Can go overdrawn which creates an overdraft
• Overdrafts


  • Agreed permission or extension of an agreed line of credit from a bank or lending institution that is granted when an account balance reaches zero
  • Allows a customer to overdraw the current account to the agreed amount, even when the account has no money
  • Differs from a loan in that the customer draws funds up to the limit and repays it on a number of occasions if so desired and then can redraw it again
• Credit Cards


  • Provide settlement of bills and availability of credit up to a certain specified limit
  • The cardholder gets a monthly account which can be settled in full or an agreed amount can be paid subject to the credit limit not being exceeded and subject to the payment of interest
• Charge Cards

  • Not credit cards as they do not offer credit, simply a convenient way to pay for large purchases
  • The charge card holder must pay the card issuer at the end of each month or in some cases immediately, the full amount of purchases made with the card
• Debit Cards


  Payment for purchases is immediately withdrawn from the cardholder's current account, there is no credit involved
• Housing Loans


  • Long-term loans for the purchase of or refurbishment of residential premises, which is often the borrower's principal private residence (PPR)
  • Typically secured by a legal mortgage or charge/ lien on the property and are known commonly as a "Mortgage"
• Personal Loans


  • Have many uses and do not usually require a definition for usage
  • The term of this type of loan is normally less than five years and they are usually unsecured
• Leasing


  A form of short-term (up to five years) loan availed of by personal and business customers
• Foreign Exchange


  Providers offer to sell your required currency at a higher rate than what they secured it at
• Types of insurance policies

  • Protection policies
  • General insurance policies
• Protection policies


  The main purpose is to provide personal protection benefits in the event of death and/or serious illness
• General insurance policies

  • For example, health, household and motor insurance, etc.
  • Some general insurance companies also offer policies which provide short-term cover against accident, travel insurance, etc.