Financial institutions

• What are the 10 features of financial institutions?

  • Pawnbrokers
  • Payday loans
  • Bank of England
  • Building societies
  • Banks
  • NSI
  • ISA
  • Pension companies
  • Credit unions
  • Insurance companies
• Customer information guidance and advice

  Money advice service, price comparison website, citizen advice, IFA, debt counsellors, IVA
• What is an ISA?

  A savings account where the holder is not charges income tax on interest received
• What is an FOS?

  An organisation appointed by the government to solve customers unsolved complaints.
• What is FSCS?

  An organisation independent of government and the financial services industry
• What does FSCS do?

  -Pays compensation for financial losses

  -Covers claims against business authorised by the FCA
• What is an IVA?

  An arrangement made with creditors to pay all or part of debts.
• What is a building society?

  Financial institution that provides banking and financial services to its members
• What is the Bank of England?

  UK's central bank in charge of UK's financial stability
• What is an NSI?

  It is a state owned savings institution in the UK
• What is the FCA?

  An independent organisation funded by membership fees charges to financial service providers
• 5 ways to communicate with customers

  Branch banking, postal banking, online banking, mobile banking, telephone banking.
• Customer protection for personal finance

  FCA, FOS, FSCS, OFT and legislation - consumer credit
• What does the FCA do?

  • Authorise business trades
  • Regulate business actions and make sure the procedures in favour of clients
  • Ensures service providers meet standards
• Advantages and disadvantages of NSI?

  ADV- offers addition services

  -government backed - 100% security on savings

  DISADV - Rates are variable

  -not easy to access
• Advantages & disadvantages pf the Bank of England?

  ADV - responsible for UK financial stability

  -Interest rates designed for stable economy

  DISADV - expensive borrowings

  -members of public can't access
• Advantages & disadvantages of building societies?

  ADV - secure places to store money

  -Costs are kept down

  DISADV - Savings only protected up tp £85000

  -Lack business drive
• Advantages & disadvantages of IVA?

  ADV- manages debt repayment

  -individual/independent advice

  DISADV- Can't help with all debts

  -Affects credit rating
• Advantages & disadvantages of FSCS?

  ADV- provide compensation if there is a loss arising from bad advice or if an investment provider fails

  DISADV- Doesn't consempate every consumer who suffers a loss
• Advantages & disadvantages of ISA?

  ADV- Tax not charges

  -Saver keeps all savings rewards

  DISADV- Limit on number of withdrawals

  -Limit on amount put in
• Advantages & disadvantages of FOS?

  ADV - No costs

  -easily accessible

  DISADV -Can take a long time (6-9 months)

  -The amount that the FOS can award by way of compensation is limited
• What does the FOS do?

  • Provides advice
  • Gives impartial decisions
  • Can't fine businesses
• What are the IFA?

  Professionals who offer independent advice on financial matters to their clients and recommend suitable financial products from the whole of the market
• What is a pension company?

  It is a company that offers pension savings - set up by employers
• What is a credit union?

  A not-for-profit financial institution that accepts deposits, make loans, and provides a wide array of other financial services and products.
• What is a pawnbrokers?

  a person who lends money in exchange for someone's valuable possession
• Pros of branch banking

  • face-to-face contact
  • develop trust and security
  • transactions done immediately
  • can offer additional advice and services
• Cons of branch banking

  • time-consuming (e.g. travelling to the branch, queues)
  • restricted opening hours (difficult for people with busy lifestyles)
• What is online banking?

  A banking method that allows customers to manage their account electronically through internet.
• Pros of online banking

  • access anywhere
  • higher privacy (due to no personal contact)
• Cons of online banking

  • initially it can be time-consuming (setting and applying for it)
  • no extra advice (due to no personal contact)
  • increased risk of cybercrime (hacking)
  • limited facilities (e.g. no cheques, cash withdrawals)
  • not suitable for everyone (e.g. no access to internet)
• What is telephone banking?

  A banking method which allows the consumer to conduct transactions by telephone
• Pros of telephone banking

  • talk directly with advisor
  • easily carry out simple transactions
• Cons of telephone banking

  • potentially time-consuming (e.g. on hold, waiting line)
  • not 24/7
  • limited service (e.g. no cheques)
  • risk of identity fraud (theft)
• What is mobile banking?

  Customers manage their accounts through mobile devices (e.g. smartphones or tablets).
• Pros of mobile banking

  • 24/7 (easy, quick, convenient)
  • instant transaction (time effective)
  • privacy maintained
• Cons of mobile banking

  • no extra advice (due to no personal contact)
  • need internet banking beforehand
  • hacked easily (if phone stolen)not suitable for everyone
• What is postal banking?

  The provision of financial services via the postal service.
• Pros of postal banking

  • 24/7
  • accessible in remote areas
• Cons of postal banking

  • time consuming and costly (postage takes days to be received)
  • it can be lost
  • limited services (e.g. no cheques and cash)