Level 3 BTEC Business Financial Institutions Question with complete solution 2023

Level 3 BTEC Business Financial Institutions Question with complete solution 2023Bank of England This is the UK's central bank with responsibility for maintaining a healthy level of financial stability. Advantages of the Bank of England 1. Responsible for protecting the financial stability of the economy as a whole. 2. Setting interest/ inflation rates. Disadvantages of the Bank of England 1. Not a bank for members of the general public. 2. Can raise interest rates which makes borrowing more expensive. Banks An organisation that handles financial transactions and keeps money on behalf of its customers. Advantages of Banks 1. Offers a range of services and account types. 2. Provides a secure place to store money. 3. Pays interest on credit balances. Disadvantages of Banks 1. Savings are only protected up to £75,000. 2. Costs to customers may be higher to fulfil shareholder objectives. Building Societies Organisations that handle financial transactions and stores money on behalf of its members. Advantages of Building Societies 1. Offers a range of services and account types 2. Owned by members and costs can be kept down resulting in higher interest payments. Disadvantages of Building Societies 1. Savings are only protected up to the value of £75,000. 2. May lack the business drive of a commercial bank. Credit Unions Non- profit organisations that handle financial transactions and stores money on behalf of its members. Advantages of Credit Unions 1. 1. Offers a range of services and account types 2. Owned by members and costs can be kept down resulting in higher interest payments. 3. Offers additional benefits to the community or a good cause. Disadvantages of Credit Unions 1. Savings are only protected up to the value of £75,000. So if the union goes bankrupt all savings is lost. 2. May lack the business drive of a commercial bank. National Savings and Investments A government-backed organisation that offers a secure saving option. Insurance Companies Businesses that protect against risk of loss in return for a premium. Disadvantages of National Savings and Investments 1. Rates are variable 2. Not easy to access due to lack of high street presence. 3. Often required to give notice on withdrawals.