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Topic 9, Before making a financial decision you should consider these…
Topic 9
Ways to obtain information
Brochures and leaflets - people can obtain information about financial products by visiting branches, collecting leaflets from branches of the financial service providers and then compare the information given to find something suits the needs and it will include a application for the customers to complete.
some large banks and credit card companies also send out marketing literature through post and do telephone marketing. Some people do not like this as they are being disturbed when they don't want to. Receiving phone calls from the provider would make people unsure if it is a scammer calling them or the genuine provider.
Providers websites - all providers have websites containing information about their product and allow customers to buy and mange products online. Websites are regulated same way as leaflets and most providers include a way people can contact them and discus any issues or questions. People can apply for products and services online.
TV and Radio advertisement
providers may use tv and raido to advertise their product and brand. they do not give much information and is intended to publics the providers name. this is done to build an awareness of the brand and by associating it with a life style However some terms and conditions are given at the bottom of the screen but many listeners and watchers may not pay attention to it.
Information from media
a lot of information is available via the mass media and since it does not come from a provider its intent may not be to make sales.
however people can never be sure if the information is reliable as some of it might be biased or incomplete. Furthermore if they get a product from these advices they cant do much if it doesn't suit their needs. this is why its important to seek professional advice and never reply on them alone.
Providers staff
a customer can arrange a interview with a building society, bank or credit union either at a branch or by asking for a home visit to discuss their financial needs.
Money Box
money box is BBC program that describes itself as giving the latest news from the world of personal finance plus advice trying to make the most of their money. money box does not market products and its main purpose is to identify problem people are having with particular products or to warn listeners against scams.
Price Comparison Websites
Price comparison websites have been developed to let customers compare financial products more easily and to make informed choices.
It is important to remember however comparison websites are often brokers for the products they include. This means that the company running the websites earns a commission from the financial service provider if people buy from their website which effects what it includes and recommends.
they tend to not have the whole market focus and so each excludes certain products that might be more suitable for a individual customer.
Newspaper
Most newspapers have a personal finance section in paper and online version and they contain a selection of current stories on personal financial products and warnings against problems and scams
there is a strong life style feel as it contains stories from specific people who have benefited from or had problems with a product
Information from charities
Citizens Advice
Citziens advice is a registered charity and is the membership organisation for the cizten advice bureaux. which deliver advice services from more than 2,500 community in England is run by 280 individual charities. it helps people resolve their legal, money and other problems by providing free, independent, confidential and impartial adivce on their rights and responsibilities, and by influncing policy makers in order to improve the polices and pratices that affect peoples lives.
their campaigns on issues that are causing people and seek to create a public debate on them.
StepChange Debt Charity
it provides expert and impartial advice that people need when their debt gets out of control and suggests practical solution. its advice is free because it is funded by charitable contributions from creditors and others.they set out steps for a debt free future:
- decide to get debt help
- access debt advice via its anonymous online debt remedy tool or call the telephone debt helpline and speak to an expert adviser.
- use the practical solution that works for them.
they do not gaurantee this will solve all of an indivualds debt problems but it will make it easier for them by suggesting a way out by helping to relieve their stress.
National Debtline
it is a national telephone helpline for people with debt problems in the uk. it services are free and confidential and independent. it gives specialist advice over the telephone and discusses peoples options. its debt advice includes a self help pack, fact sheet, guides and review packs, a personal budget sheet, debt options and sample letters.
Public sources of information
Moneyhelper
is a independent service set up under the financial services act 2010. it provided by money and pensions services and combines the support and advice from three older government backed services. its statutory objective is to enhance the understanding and knowledge of members of the public about financial matters including Uk financial system and to enhance peoples ability to mange their on financial affairs and is free to use and gives unbiased moeny advice to everyone in the uk by website, phone and face to face.
The Financial Conduct Authority
its aim is to protect consumers t ensure the financial services industry remains stable and to promote healthy competition between financial service providers. its website contains information on financial products and consumers can protect themselves against bad products, misleading and scams, making complaints and receiving compensation.
Competition and Markets Authority
their aim is to make the market work well for consumers, which it achieves by promoting and protecting consumer interests while ensuring that businesses are fair and competitive. it website contains information about its announcements, consulations and publications/
Financial advisers are people who hold a qualification that allows them to give financial advice to customers. there are two types of independent and restricted.
independent financial advisersthey provide independent advice in that they are able to consider all types of retail investment product that might meet a clients needs and objective
- they must offer a broad and comprehensive range of retail investment products including life policies, unit trusts, stakeholder pension scheme, investment trust savings scheme and securities in investment trust.
- give unbiased and unrestricted based on their comprehensive and fair analysis of the relevant market
- tell consumers that they operate as an independent adviser before providing any advice
restricted financial advisers
they can only recommend certain types of products from either one or limited number of providers. they cannot use the word independent to describe themselves.
if a customer chooses to get a mortgage without advice its called execution only.
advisers charge their clients for their services and the client needs to ask before hand how much they are going to be asked to pay. some advers are paid in commosion from firms whos products are being sold but dont directly pay them.
Before making a financial decision you should consider these stages:
- 1.own needs, wants and aspirations
- 2.solutions and providers available
- 3.details of product brands
- financial plan
they need to make sure the information they are being given is accurate and reliable
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Information from providers
financial services firms provide people with information about their own products but will never recommend their competitors. this information is aimed at a large audience so it does not take into account a person's situation.
It is required by the FCA for the information given by financial services providers to be fair and not miss leading and highlight any special risk. To do this FCA requires them to sign up to code and marketing literature to be in English so Everyone can understand.
if the product information is misleading the providers might need to compensate the customer if they were misled by literature.
Providers need to point out the customers any costs, penalties or other obligations attached to the product to try ensure that the product is suitable for the customers circumstances
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