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Unit 3 Student Book Outcome B
BTEC L3 Cert Business Studies (Wilberforce College)
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Unit Specification: Unit 3 – Personal and Business Finance
Method of assessment
Externally marked exam (80 marks – 2 hours)
Unit in brief
Learners study the purpose and importance of personal and business finance. They
will develop the skills and knowledge needed to understand, analyse and prepare
financial information.
Unit introduction
This unit includes aspects of both personal and business finance. Personal finance
involves the understanding of why money is important and how managing your
money can help prevent future financial difficulties. It is vital you understand the
financial decisions you will need to take throughout your life and how risk can affect
you and your choices. This unit will also give you an insight into where you can get
financial advice and support.
The business finance aspects of the unit introduce you to accounting terminology,
the purpose and importance of business accounts and the different sources of
finance available to businesses. Planning tools, such as cash flow forecasts and
break-even, will be prepared and analysed. Measuring the financial performance of a
business will require you to prepare and analyse statements of comprehensive
income and statements of financial position.
This unit will provide a foundation for a number of other finance and business units
and will help you to analyse profitability, liquidity and business efficiency. It will give
you the knowledge and understanding to manage your personal finances and will
give you a background to business finance and accounting as you progress to
employment or further training.
Summary of assessment
This unit is assessed by a written examination set by Pearson. The examination will
be two hours in length. The number of marks for the examination is 80. (Section A
contains questions on the personal finance unit content and approximately one-third
of the marks, and Section B contains questions on the business finance unit content
and approximately two-thirds of the marks).
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Assessment outcomes
AO1 Demonstrate knowledge and understanding of business and personal finance
principles, concepts, key terms, functions and theories. Command words: describe,
explain, give, identify, outline Marks: ranges from 1 to 4 marks.
AO2 Apply knowledge and understanding of financial issues and accounting
processes to real-life business and personal scenarios Command words: analyse,
assess, calculate, describe, discuss, evaluate, explain Marks: ranges from 2 to 12
marks.
AO3 Analyse business and personal financial information and data, demonstrating
the ability to interpret the potential impact and outcome in context Command words:
analyse, assess, discuss, evaluate Marks: ranges from 6 to 12 marks.
AO4 Evaluate how financial information and data can be used, and interrelate, in
order to justify conclusions related to business and personal finance Command
words: analyse, assess, discuss, evaluate Marks: ranges from 6 to 12 marks.
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Learning Outcome B1 – Features of Financial Institutions
Activity 1 – Features of Financial Institutions
Whilst going through the different types of financial institutions add the key features
of each under the correct heading.
Institution Key features
Bank of England
Banks
Building societies
Credit unions
National Saving and
Investment
Insurance companies
Pension companies
Pawnbrokers
Payday loans
Advantages & Disadvantages of Institutions
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Type of Advantages Disadvantages
Institution
Bank of • Protect the financial stability • Do not lend to the general public
England of the UK economy • Can raise interest rates making
• Lend to banks borrowing such as mortgages
• Set interest rates more expensive
Banks • Secure place to store • Savings only protected to
money £85,000 if the bank goes
• Pay interest on savings bankrupt
• Variety of services • Owned by shareholders
therefore are designed to make a
profit
Building • Owned by members • May lack the business drive of
Societies • Variety of services commercial banks as banks are
• Pay interest on savings profit driven
• Safe place to store money • Savings only protected to
£85,000
Credit • Variety of services • May lack the business drive of
Unions • Owned by members commercial banks as banks are
• Offer additional benefits to profit driven
the community and charities • Savings only protected to
£85,000
National • Savings are 100% secure • Variable rates
Savings & as it is Government backed • Lack a high street presence
Investment • Various ways to save such • Usually need to give notice on
as premium bonds withdrawals
Insurance • Protect against unexpected • Premiums assessed on risk and
companies losses/events the higher the risk the higher the
• Cover available on a variety premium
of things • Owned by shareholders
• Pay monthly so easier to therefore need to make a profit
budget
Pension • Structured way to plan for • Poor investment decisions may
companies retirement mean a poor return on
• Matched contributions by investment
employer • Cannot access money until the
• Tax benefits agreed term
Pawnbroker • Quick way of acquiring short • Amount given for the asset is
s term cash much lower than its worth
• Interest not charged • Asset will be sold on if loan is not
• Buy back pawned asset repaid
Payday • Quick way of acquiring cash • Interest charged is very high
Loans in a short period of time which results in the amount
being paid back being
substantially higher
Activity 2 – Infographic on a Financial Institution
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Using the features of the institution and the table of advantages and disadvantages
below, create an infographic for your given institution. It needs to cover at least the
following:
• Explain what the given institution is
• Explain the features of that institution
• Outline the advantages and disadvantages of the institution
• Examples of the types of products/services they offer
• Images that support the points made
• Any other relevant information that will provide you with a better
understanding of that financial institution.
You will present this back to the group (make sure you complete this professionally
as these will be placed on the VLE for everyone to use and revise from).
Create/draw/copy and paste your infographic below
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Activity 3 – Evaluate a Financial Institution
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For one type of institution (other than the one you did in activity 2) use this
information to evaluate the usefulness of that institution.
Evaluate the usefulness of___________________ as a financial institution
Activity 4 – Knowledge Check B1 Feature of Financial Institutions
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List all 9 financial institutions
Describe two types of financial institution
Provide an advantage and disadvantage of the Bank of England
Explain the pros and cons of using a bank
Discuss the value of payday loans companies as a financial institution
Learning Outcome B2 – Communicating with Customers
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Activity 5 – Methods of Communicating with Customers
Create a spider diagram with each method of communication with customers and
what that method is.
Methods of
Communicating
with Customers
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Activity 6 - Advantages and Disadvantages of Communication
methods
Communication Advantages Disadvantages
Method
Branch
Online
Telephone
Mobile
Postal
Activity 7 - Exam Scenario Question
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Scenario
Isa is new to banking and isn’t sure which method of banking he should use to do his
banking. He has a smartphone but no desktop computer. He also has a car so can
possibly drive to a branch. He has a part time job at Greggs and his wages are paid
into his account each month automatically. He very rarely uses cash as he pays for
most things using apple pay.
Assess the benefits and drawbacks of the different methods available to Isa and
recommend which method would meet his needs best.
Activity 8 – Knowledge Check B2 Communicating with Customers
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List the 5 methods of communication with a bank
Describe branch banking
Provide two disadvantages of mobile banking
Provide two advantages of postal banking
Assess telephone banking as a means of banking
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Learning Outcome B3 – Consumer Protection in Relation to
Personal Finance
Activity 9 – Function, Role & Responsibility of Consumer
Protection Bodies
Complete the worksheet that covers
Function: What do they do?
Role: What are they there for?
Responsibilities: What do they have authority over?
Financial Conduct Authority (FCA) Financial Ombudsmen Service (FOS)
Financial Services Compensation Legislation: Consumer Credit
Scheme (FSCS)
Activity 10 – Financial Scenarios
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Mabel has £120,000 pounds in inheritance in a savings account at a bank. The bank
has just gone bankrupt and has announced that it will not be able to secure peoples
savings.
Assess, using what you know about the consumer protection bodies covered what
this means for Mabel and her savings.
Activity 11 - Video on the Work of the FCA
FCA Video Link
What work has the FCA done to regulate consumer credit suppliers?
Does the Government need to regulate financial institutions? Use the video and
perform further research to argue whether you believe regulation is necessary or not.
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Activity 12 - Knowledge Check B3 Consumer Protection in Relation
to Personal Finance
Create a 10 question quiz with answers regarding all the consumer protection bodies
covered.
Questions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Answers:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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Learning Outcome B4 – Information Guidance and Advice
Activity 13 – Information, Guidance & Advice Crossword
1
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2. Professional individuals who provide 1. Compare the price of goods and
independent advice and guidance on a services from a range of companies.
range of financial products such as;
mortgages, pensions, insurance and 3. A charity run organisation that provides
investing. advice on a range of financial and non
financial issues.
4. A professional service that offers
independent advice. It is a common
process that is used to help individuals
with debt
5. A legal process through which people
or other entities who cannot repay debts
to creditors may seek relief from some or
all of their debts.
6. An agreement with your creditors to pay
all or part of your debts. You agree to
make regular payments to an insolvency
practitioner, who will divide this money
between your creditors.
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Activity 14: Information, Advice & Guidance Table
Whilst we go through the various types of information and guidance available
complete the boxes below with an explanation and the advantages and
disadvantages.
Citizens Advice
Independent Financial Advisor (IFA)
Price Comparison Website
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Debt Counsellors
Pet
Individual Voluntary Arrangements (IVA)
Bankruptcy
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Activity 15 – Difference Between Bankruptcy & IVA
Bankruptcy Video Link
Whilst watching the video fill in the Venn diagram regarding the similarities &
differences between both bankruptcy and IVAs. Perform further research if needed.
Bankruptcy IVA
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Activity 16 – Scenario Question (12 marks)
Drake is married with a young family. He is a homeowner with a mortgage and has
two personal loans and outstanding balances on three credit cards.
One of the personal loans is secured on his house. His personal circumstances have
changed since he took on these debts. He now earns significantly less than he did
and he can no longer afford the debt repayments.
As a result, he is in arrears on all of his debts. He has been served with default
notices demanding repayment in full. Drake has been advised to either apply for an
IVA (Individual Voluntary Arrangement) or to apply for bankruptcy.
Evaluate whether Drake should apply for an IVA or apply for bankruptcy.
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Activity 17 – Knowledge Check B4 Information Guidance and
Advice
List the 6 sources of information guidance and advice
Explain the role of an Independent Financial Advisor (IFA)
Provide two advantages of using Citizens Advice service
Provide two disadvantages of using price comparison websites
Analyse the benefits and drawbacks of using a debt counsellor
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Activity 18 – Learning Outcome B Kahoot Quiz
Attempt the Kahoot quiz to test your knowledge of Learning Outcome B of Unit 3:
Personal and Business Finance. Once you have completed the quiz, answer the
questions below to assess your strengths and areas for development.
What did you score on the Kahoot quiz?
/20
What areas of Learning Outcome B can you identify as your strengths after playing
the quiz?
What areas of Learning Outcome B can you identify as your development areas after
playing the quiz?
How do you plan to develop the areas you have identified to increase your
knowledge and understanding of these topics?
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Activity 19 – Learning Outcome B Key Word Scramble
1. ICLNANFIA SITNUNTITOSI ____________________________
2. NBAK OF GADELNN ___________________________________
3. GLINDBIU TISOCYE __________________________________
4. DREITC IOUNN ______________________________________
5. HCNARB ____________________________________________
6. OMIEBL NGINBKA ____________________________________
7. AOSPLT BANNKGI ____________________________________
8. ACIIFANLN UNCCTDO TTUOYARHI _______________________
9. ILNCAAFIN NDSMOMBUE EERICVS _______________________
10. ZICIETSN IEACDV ___________________________________
11. DTBE CNLESOOLRUS __________________________________
12. CPRUNAYTKB ________________________________________
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Activity 20 – Learning Outcome B Word Search
B F O G O J J H C N A R B F E C N I X K F M K G
C T P O V Y X Y B P O W A F S I B N H G G H T F
L Z A H B O M V A K U W W P F U G E T L K A A I
O Q V S R O L L E S N U O C T B E D B T G A F N
K D L X T I P R G C Y S G T H G Y G I B G U U A
A Z V R P M K N J Z T S J Q J H Z B L Q D Y Y N
C G G I Z B K V A A D X N P B O D V L N E I T C
S U O X C Q Q H L I C I S A Q K R D P P I U E I
U L A G P O P B G J V W A I O S I I S U O P I A
B Z O N M V A E H N T E S X J L J K O B F Y C L
F L I F H N H K L X I B G L L D Y K R A D J O I
J V D T K R Y J P R A K G P U R M A M U P N S N
T P E I S A T B C N C I N V M L T V D G A G G S
J E N V Y D B E K U M N N A Q V H A W Y M C N T
G G N X B P X R X Z O G R A B V U A L Y A C I I
Y S V D R W U P G T I T S N W E T X T O D P D T
Z R A C P P J G I R B W X G U Y L E Z J N H L U
P W J E T K C I T I Z E N S A D V I C E H G I T
E K G C K M Q M J J B A B M E V F G B E U W U I
N M Y X V D Z F U S I Z T V U X Y P B O O L B O
O A J C R E D I T U N I O N C A L J Z N M E A N
E Z C Y Z E A Y H B O S G U Y H Q B P L E E B S
U D W J X F P A W N B R O K E R S R S Z W P F C
R R M B A N K O F E N G L A N D M S S K I O M W
Pawnbrokers Payday Loans Bankruptcy Debt Counsellors
Citizens Advice Postal Banking Mobile Banking Branch
Credit Union Building Society Bank of England Financial Institutions
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Activity 21 – Learning Outcome B Crossword
1
8 9
10
11
12
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Across Down
2. In charge of setting interest rates, 1. Organisations that offer financial
issuing legal tender and controlling the services to individuals including depositing
UK's national debt and withdrawing money, investments and
4. This form of information guidance and advice
advice is available 24/7 and is free to 3. Disadvantages of this advice is that you
access will be charged and the advice will only
5. This is an acronym for the consumer focus on debt management
protection organisation that regulates the 6. The name for a physical place where
actions of financial service providers customers can visit to carry out financial
7. Non for profit organisations that handle transactions
financial transactions and store money on 9. An institution that lends money against
behalf of their members the security of a personal asset, such as
8. This acronym stands for the consumer jewellery or a smartphone.
protection body that pays compensation to
consumers if the service provider is
unable to
10. A disadvantage of this type of banking
is that there is a higher risk of fraud and
identity theft
11. This method of banking can get lost
and often takes longer than other methods
12. A free service ran mainly by
volunteers
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Activity 22 - Personal & Business Finance Outcome B Checklist
Unit 3: Personal and Business Finance Checklist
Learning Outcome B: Explore the Personal Finance Sector
Topic Your explanation of the terminology Exam
ready?
B1 - Features of Financial Institutions
Types of organisations and
their advantages and
disadvantages:
Bank of England
banks
building societies
credit unions
National Savings
and investments
insurance
companies
pension companies
pawnbrokers
payday loans
B2 – Communicating with Customers
Methods of interacting with
customers, advantages
and disadvantages:
branch
online banking
telephone banking
mobile banking
postal banking
B3 – Consumer Protection in Relation to Personal Finance
Function, role and
responsibilities of:
Financial Conduct
Authority (FCA)
Financial
Ombudsmen
Service (FOS)
Financial Services
Compensation
Scheme (FSCS)
legislation –
consumer credit
B4 – Information Guidance and Advice
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Function, role and
responsibilities,
advantages and
disadvantages of:
Citizens Advice
independent
financial advisor
(IFA)
price comparison
websites
debt counsellors
Individual Voluntary
Arrangements
(IVAs)
bankruptcy
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