DipFS Unit 3 key terms

Key terms from Topic 3

Automatic credit The method by which state benefits are paid directly into a bank
transfer account.

Where a computer takes over a task previously carried out by a

Automation
person.

The interest rate that the Bank of England uses when it lends money
to other banks. Financial services providers take account of the Bank
Bank rate
rate when they decide how to set interest rates on their own
products.

A current account that allows people to store their money as an

electronic balance and make payments by direct debit, standing
Basic bank account
order, prepaid cash card or by withdrawing cash. There is no debit
card, cheque book or overdraft facility on this type of account.

Being paid in cash, rather than money being paid directly into a
Cash in hand
person’s bank account.

Competition and
The body responsible for strengthening business competition and
Markets Authority
preventing and reducing anti-competitive activities.
(CMA)

Where the buying and selling of goods and services is the most
Consumer culture
important social and economic activity.

The amount individuals are spending on the goods and services they
Consumer demand
are consuming, funded by their incomes, savings and borrowings.

Legislation that aims to prevent businesses from misleading

Consumer Protection
consumers about the goods and services they are offering and from
from Unfair Trading
using aggressive sales techniques to pressure people into buying
Regulations 2008
from them.

A plan to deal with unexpected changes in income and / or

Contingency plan
expenditure.

The amount businesses are spending on the goods and services they
Corporate demand are consuming, funded by their revenue, savings, borrowings and
capital injections from investors.

A reduction in the availability of loans or a tightening of the

conditions needed to obtain one. The global financial crisis of
Credit crunch
2007–08 began when financial institutions became reluctant to lend
funds to one another.

Statistical data relating to population, eg in terms of age, sex,

Demographics
ethnicity, culture, social status and geography.

Deposit The lump sum required by a mortgage lender as down payment.

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DipFS Unit 3 key terms

A deliberate reduction in the value of a currency in relation to other

Devaluation
currencies, carried out as part of a government’s economic policy.

Economic inequality caused by a lack of access to, use of, or

Digital divide
knowledge of internet technology.

The increase in the market value of the goods and services produced
Economic growth
by an economy over time.

Equity loan A loan secured on a mortgaged property.

A legislative act of the European Union, which requires member

EU Directive states to achieve a particular result without dictating the means of
achieving that result.

A legislative act of the European Union that becomes immediately

EU regulations
enforceable as law in all member states simultaneously.

An economic and political union of 28 member states to which the

European Union
UK belongs but which it has decided to leave following a referendum.

Exports Goods and services produced in one country and sold to another.

The price of one currency in terms of another; eg it enables people

Exchange rate to calculate how many US dollars can be purchased with one pound
sterling.

Factors over which individuals have little or no control, such as

External factors
interest rates and inflation.

Financial Conduct The organisation that regulates financial firms providing services to
Authority (FCA) consumers, and maintains the integrity of the UK’s financial markets.

The inability to get access to even the most basic financial services
Financial exclusion
products and services.

The delivery of financial services at affordable cost to disadvantaged

Financial inclusion
segments of society.

An individual’s level of knowledge and understanding of financial

Financial literacy
matters.

Financial
An independent body set up by Parliament that settles customer
Ombudsman Service
complaints about providers at no charge to consumers.
(FOS)

A part of the Bank of England that monitors and responds to risk

Financial Policy
posed to the entire financial services market. Its focus on the whole
Committee (FPC)
market makes it a macro-prudential authority.

The rules that govern how financial services providers operate and
Financial regulation
deal with their customers.

Financial Services A key Act of Parliament governing the regulation of the financial
Act 2012 services industry.

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DipFS Unit 3 key terms

Financial Services A compensation scheme that pays compensation to account holders

Compensation of up to a certain amount per provider if the provider goes into
Scheme (FSCS) default (so cannot pay account holders the money in their accounts).

How the government manages the amount of money it raises in

Fiscal policy taxation, the amount it borrows on the financial markets, and the
overall amount it spends.

Floating exchange Where the value of a currency is determined by the supply of and
rate demand for that currency.

The integration of economies, industries, markets, cultures and

Globalisation
policy-making around the world.

Processes and products that are renewable, sustainable and / or non-

Green technology
polluting, such as energy from tidal power.

Grey culture The older section of the population.

Housing market The buying and selling of residential property.

A rise in prices, which means that the purchasing power of money

Inflation
falls.

A situation in which consumers are not fully informed about a

Information failure
product.

The amount, expressed as a percentage, that a financial services

Interest rates
provider charges a borrower when it lends money, or pays to a saver.

The movement of people from one location to another, to settle in

Migration
the new location.

When an individual or provider is negligent or reckless in selling a

Mis-selling product to an unsuitable customer, and / or in misrepresenting the
contract.

Monetary policy The manipulation of interest rates to maintain low inflation.

Monetary Policy The Bank of England committee responsible for keeping inflation
Committee (MPC) under control by the manipulation of interest rates.

Taking account of the different cultural needs and expectations of

Multiculturalism
the various ethnic groups that make up society.

The situation where a mortgage loan is bigger than the value of the
Negative equity
property.

Those who own their own property outright or have a mortgage on

Owner occupiers
it.

An insurance product intended to ensure repayment of loans should

Payment protection
a borrower face unexpected events that prevent them from repaying
insurance (PPI)
the debt.

The London Institute of Banking & Finance 2017

DipFS Unit 3 key terms

A tool used to analyse how six key areas (Political, Economic, Social,
PESTEL analysis Technological, Environmental and Legal) in the external environment
might affect individual and corporate financial decisions.

Prudential
One of the two main regulators of financial services in the UK (the
Regulation Authority
other is the Financial Conduct Authority).
(PRA)

Ensuring all individuals and groups in society have access to certain

Social inclusion rights, such as employment, adequate housing, health care,
education and training.

Lending to and borrowing by consumers with untested or poor credit

Sub-prime market
histories.

Meeting the needs of society in ways which can continue indefinitely

Sustainability
into the future without damaging or depleting natural resources.

An organisation that will investigate individual cases of bad practice

Trading Standards
on behalf of consumers and take steps to resolve the problem.

The term used to describe the values, attitudes and interests shared
Youth culture
by people in their teens and early 20s.

The London Institute of Banking & Finance 2017