"Political factors are about ways in which the policies of a government and the impact that these policies affect people.
These factors are coming from government people being like "I think people in our country are not spending too much money"
Providers have to put up with rules, regulations, regulatory and consumer protection bodies.
These regulatory and consumer protection bodies also ensure that providers do legal stuff.
Crisis have shown that badly regulated financial institutions is a reason for us to regulate them.
Better regulation back then could have helped us prevent the crisis.
Crisis 07-08 resulted in many governments reviewing their regulations and creating a reform with an aim to make the systems more effective in terms of maintaining a sustainable global financial services industry and properly protecting consumers' interests.
UK was member of the EU so we had to put up with their legislation too.
Europe is aiming to create global market or at least market of EU at the moment. This means that her should be a high level of competition to ensure that consumers can choose the products and services that meet their needs + the best value for money.
Overall regulations are sets of what providers can do and what the cannot, this includes the way in which they sell their products and services, advertisement, transparency, quality of financial advice and respond to complaints.
Products can be complicated, regulation helps people to learn all the required and important information ('crystal mark')
If people make wrong choices they can end up in jail or homeless so it's very important to regulate and government don't need these people.
Financial Services Authority have been abolished after crisis and its responsibilities has been divided between FCA, FPC and PRA. (April 2013)
Abolishing FSA had to return overall responsibility for regulating the financial services and maintaining the long-term sustainability of the industry.
New bodies are responsible for enforcing the system of regulation that governs the financial services industry to maintain the stability and individual providers and consumers rights and their finances.
Consumer doesn't always know what the product or service that they are buying is actually about.
There were cases of mis-sold products.
FCA regulates consumer credit and helps people to afford getting into debt (at least makes them to think about it so there is no mis-selling
FPC is "charged with a primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. "
PRA " is responsible for the prudential regulation and supervision of around 1,700 banks, building societies, credit unions, insurers and major investment firms. The PRA’s objectives are set out in the Financial Services and Markets Act 2000 (FSMA). The PRA has three statutory objectives:

a general objective to promote the safety and soundness of the firms it regulates;
an objective specific to insurance firms, to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders; and
a secondary objective to facilitate effective competition."

These three bodies that "form" FCA (which doesn't exist but eh) are responsible for enforcing the system of regulation that rules the financial services industry, maintaining the stability of the industry and individual providers, ensuring that people are treated fairly.

FOS helps people to resolve what happened in the conflict between provider and consumer; If there was a regulatory issue, then they have legal right so put things right. (funded by providers who are part of the scheme)

FSCS provides safety net if a bank, building society or others fail to pay to the customers their claims. (funded by providers who are part of the scheme)

CMA (Competition...) , Citizens Advice and local authority traiding standart offices also have povers but they are more general and don't have specific audience.

Importance of regulation banking and finance:

Protects consumers from dishonest, incompetent or financially unstable providers.
To provide sustainability of the provider and it's shareholders > reducing future crisis.
People are more confident in financial system and so in government > encourages them to use financial solutions available.
Makes providers not to cheat but work properly.
Makes providers to be polite to people and inform them about everything so there are no underwater rock..

The perfect market - market where is a wide range of products, providers, is sold in large quantities and consumer knows their financial position (NWA's and balance), economical position, information about the product, the information is transparent, there is a high interaction with consumers, financial safety and it's all done without hassle.
Information failure = when consumer is not fully informed about the product
Market failure = when there is no guarantee that free competition and market forces will deliver the best products at the best prices.
Even tho regulation is so sweet for consumer, it makes prices higher because providers feel more risk and responsibility what makes consumers t suffer without these products or buy paying more than they feel would be reasonable.

	Created by Jevgenija Zukova over 7 years ago

AS Finance (UNIT 3) Note on PESTEL Analysis, created by Jevgenija Zukova on 09/12/2016.

PESTEL Analysis