The Financial Sector Flashcards

1️⃣ Familiarise yourself with the flashcards:

  • Look through all the flashcards to see what's on both sides.
  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

  • Look at the question or prompt on each card and try to remember the answer before flipping it over.
  • Check the answer and make a note of any cards you find challenging and need to go over more.

3️⃣ Consistently Review and Practice:

  • Use spaced repetition: spend more time on the cards you struggle with and go over them more often.
  • Regularly review all the flashcards to help you better understand and retain the information over time.

Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is the financial sector?

The part of the economy that provides banking, payment, saving, borrowing and insurance services.

What is a financial institution?

A business that offers financial services, such as a bank, building society or insurer.

What is financial intermediation?

The process of linking savers with borrowers through institutions that move funds between them.

How does the financial sector support economic growth?

It channels savings into investment, funds business projects, and makes trade and payments easier.

How does the financial sector help people make payments?

It provides current accounts, debit cards, bank transfers and direct debits to pay safely.

What is a financial market?

A system where people and firms buy and sell financial assets, like shares and bonds.

What is the main purpose of a stock market?

To let firms raise money by selling shares and to allow investors to trade them.

Why is the financial sector regulated?

To protect consumers, keep firms safe and sound, and maintain trust and stability.

Name one UK body that regulates the financial sector.

The Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).

What is the Financial Services Compensation Scheme (FSCS)?

A scheme that protects deposits up to £85,000 per person, per bank, if a firm fails.

How does the financial sector help people manage risk?

It offers insurance, which pools risk and pays out when covered losses happen.

What do pension funds do in the financial sector?

They collect and invest people’s retirement savings to provide income later in life.