Summary Unit 3 - Personal and Business Finance: financial institutions
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Course
Unit 3 - Personal and Business Finance
Institution
PEARSON (PEARSON)
This document explains what the many types of financial institutions are and how they work along with the benefits and drawbacks of each. This is a concise yet detailed document including all you need to know on this topic of the unit 3 exam.
Financial institutions are organisations that offer financial services to individuals and/ or
businesses. These services include the ability to deposit or withdraw money, obtain credit and
make investments, as well as offering advice on matters of personal and business finance.
Bank of England:
This is the UK’s central bank with responsibility for maintaining a healthy level of
financial stability for the UK as a whole.
Responsibilities include issuing legal tender, setting interest rates and controlling the
national debt.
Banks:
A bank is an organisation that handles financial transactions and stores money on behalf
of its customers.
Services offered will include holding deposits, making payments when instructed to do so
and supplying credit.
Building societies:
These are organisations that handle financial transactions and store money on behalf of
their members. These are part owners of the building society and have a right to vote
and receive information on the running of the society.
Unlike banks they do not have shareholders on a stock exchange which allows costs to
be kept down.
Credit unions:
These are not-for-profit organisations that handle financial transactions and store money
on behalf of their members. Members are the owners and have a voting right.
Often there is a responsibility or desire to support a community made up of its members.
National Savings and Investments:
This is a government-backed organisation that offers a secure saving option.
It offers a range of options including ISAs, premium bonds and gilts and bonds.
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