Topic 3 – The Impact of External Factors

What are external factors?

External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.

Examples of External Factors Regulation Why regulate banking and finance? Mis-selling PPI
The key external factors include: The importance of having a ◆ It protects consumers from dishonest, Payment protection insurance is
◆ inflation; comprehensive and effective system of incompetent or financially unstable designed to cover the monthly loan
◆ interest rates; regulation of the activities of financial providers. repayments of an employed person who
◆ house prices; services providers was clearly ◆ A well-regulated financial system will stops working as a result of sickness or
◆ economic growth or recession; demonstrated by the 2007–08 global be more sustainable, enhancing redundancy. Many banks, building
◆ unemployment; financial crisis. It has been widely individual and corporate financial societies and other lenders have been
◆ regulation; accepted that failings in the regulation of stability, and reducing the likelihood of found to have persuaded borrowers to
◆ exchange rates; banking and finance worldwide were a any future financial crises. buy PPI even if they were not employed
◆ legislation and legal rights; and key factor among those that caused the ◆ It gives people confidence in the (eg people who were self-employed or
◆ changes in state benefits, levels of crisis; at the very least, it is agreed that financial system and encourages them to retired) – and who were therefore not
taxation and exchange rates. better regulation may have helped to use the financial solutions that are eligible to claim on the policy. These
prevent the crisis. The result was that available to them. providers have since been forced to pay
PESTEL governments in the many countries ◆ It requires providers to run their billions of pounds in compensation to the
affected by the crisis undertook wide- businesses prudently (ie with care and affected customers. In addition, the
Political ranging reviews of their regulation foresight) and to manage their risks lenders involved have been sanctioned
Economy systems and followed this with reform, properly, particularly in terms of capital with large fines imposed first by the FSA
Social aiming to make the systems more – ie the balance between the money that and, more recently, by the FCA. Because
Technological effective in terms of maintaining a a provider holds and that owed to it. of the risk of mis-selling and other
Enivronmental sustainable global financial services ◆ It requires providers to ensure that problems, there are now several
Legal industry and properly protecting consumers are fully informed about, and consumer protection agencies that help
consumers’ interests. Overall, the have a good understanding of, the to protect financial services consumers.
system of regulation sets out exactly features, benefits, restrictions, and
Political Factors what financial services providers are terms Financial Ombudsman Service (FOS)
This refers to the various ways in which allowed to do – and what they are not and conditions of the financial products
allowed to do. It covers the way in which and services that they choose to buy. An independent body that is responsible
the policies of a government affect the for dealing with customer complaints
products and services offered by financial financial services organisations go about
providing products and services. against financial providers. It is funded
providers, and the impact that these Regulators by an annual levy on providers.
policies have on individuals. These political The present regulatory system was
factors generally derive from the EU Policy established in April 2013 under the
legislation that has been introduced to FSCS
When the effects of the financial crisis in Financial Services Act 2012. The Act
govern the financial services industry – ie the UK led to the creation of the Lloyds returned overall responsibility for The Financial Services Compensation
both the rules and regulations with which Banking Group (LBG) – comprising Lloyds regulating financial services and Scheme provides a safety net for saves
financial services providers have to TSB, the Bank of Scotland and the maintaining the long-term sustainability ensuring that up to £85,000 of their
comply, and the regulatory and consumer Halifax – EU regulators demanded that of the industry to the Bank of England. savings are protected. All businesses
protection bodies that governments have LBG reduce the size of Lloyds TSB. The FSA was replaced by: authorised by the FCA are covered. The
set up to ensure that providers do comply First, LBG proposed to sell off 631 of its 1.Bank of England’s Financial Policy FSCS is also, like the FOS, funded by the
with those regulations. branches to Co-operative Bank. Then, Committee (FPC) established in April providers who are members of the
when this sale fell through, LBG 2013; scheme and this includes the cost of any
*Current Affairs Link complied with the EU regulations by 2. Financial Conduct Authority (FCA) compensation payouts. This is only when
making Lloyds and the TSB separate 3. Prudential Regulation Authority (PRA) a bank fails and is unable to pay out
Conservatives winning the election, could savers.
lead to Britain leaving the EU, therefore companies. The hundreds of branches They are responsible for enforcing the
financial providers do not have to follow are now operated by a stand-alone TSB system of regulation ensures that
EU regulation. bank. providers conduct business fairly.

Competition & Markets Authority Interest Rates & House Prices

Social Exclusion The impact on individuals’ personal
 Topic 3 – The Impact of External Factors
What are external factors?
External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.
The new Competition and Markets Social exclusion is a complex and multi- finances When interest rates are rising, some
Authority (CMA), Citizens Advice and local dimensional process. It involves the lack Most of the decisions that politicians people will inevitably find it harder than
authority trading standards offices also or denial of resources, rights, goods and take in Parliament have the potential to others to meet their monthly mortgage
have powers and responsibilities for services, and the inability to participate affect individuals directly – and a payments and will begin to fall into
consumer protection more generally in the normal relationships and activities, political decision relating to financial arrears. Some will default on their
across all industries and businesses. These available to the majority of people in a services can have a particularly mortgages and have their homes
powers may not be specifically targeted society . . . It affects both the quality of significant impact on an individual’s repossessed. The higher cost of
towards financial services, but providers life of individuals and . . . society as a personal finances. In an unregulated, mortgages will also reduce demand for
must nonetheless adhere to this more whole. ‘free market’ financial world, individual houses and flats, because potential
general system of consumer protection consumers would be exposed to buyers may decide that they can no
regulation. Financial Exclusion unscrupulous, dishonest or incompetent longer afford the mortgage they need to
providers whose only objective would be buy a property. Falling demand will then
The inability to get access to even the to maximise their short-term profits by cause property prices to fall across the
Political Agenda most basic financial services products selling as many products as they could housing market and builders may decide
Regulation and consumer protection can and services. Financial exclusion can be at the highest prices possible. Many to build fewer new properties. The
be seen as measures that primarily try to caused by the same issues as social economists would say that little, if any, housing market is such a large part of
prevent financial services providers from exclusion, such as mental health issues regulation of the way in which products the national economy that changes in
engaging in practices (such as mis-selling) or being unable to afford financial are bought and sold is necessary if the house prices and demand for housing
that, if left unchecked, would adversely products, but there is an additional market for those products is close to have a significant impact on economic
affect consumers’ personal finances. There factor: the individual’s financial literacy. what is known as a ‘perfect market’. activity as a whole. This is as true in the
is, however, another set of government One measure of financial exclusion is the UK as it is across most European
policies – known collectively as the political number of people who do not have a countries, where it has been the
agenda – that is focused more directly on bank current account. Up until the early Interest Rates & Inflation
ambition of many people, since the
helping to ensure that every individual has 2000s, almost one in four low-income Interest rates can be described very 1960s, to own their own homes
access to the benefits that financial families were in this situation – often, simply as ‘the price of money’ – ie they
products and services can provide. retired people, low-paid employees or are the price that banks charge
self-employed workers being paid ‘cash borrowers for the money that they lend Impact on Personal Finances
in hand’, or those who, for some other and the price that banks pay to savers If fewer people are buying or moving
reason (perhaps because they did not for the use of the money that they have house, it not only reduces demand for
trust banks or understand how current deposited with the bank. Interest rates new builds, but also for goods, such as
accounts work), preferred to use cash to are also used as a central tool of new furniture, and for the services of
pay for all of their bills and spending. government and central bank economic builders, decorators, plumbers,
policy. Historically, throughout most of electricians, estate agents, surveyors,
Financial Literacy the 1970s and 1980s, interest rates in solicitors, etc. People start to lose their
the UK were high – generally more than jobs and others become afraid that their
The term ‘financial literacy’ refers to an 10% – falling to just over 5% only in jobs may be under threat. Many people
individual’s level of knowledge and 1994. From then until 2007, interest in this situation will reassess their
understanding of financial matters. rates rose and fell regularly, but never personal finances in order to protect
Those who have ‘low financial literacy’ drifted above 7.25% or below 3.75%. At themselves against the prospect of
may not know how to go about the beginning of 2008, however, the losing their job and the income that they
managing their personal finances, financial crisis of 2007–08 and the are used to having. A typical reaction
or may not be aware of the range of economic recession that followed among the majority of people in the face
financial products and services that prompted the Bank of England’s of the financial crisis was
might help them to improve their Monetary Policy Committee (MPC) to cut to try to reduce personal debts to
Social Inclusion
financial well-being. Bank rate an unprecedented 0.5%. increase regular savings.
If certain groups of people or
individuals in certain situations are denied
access to the benefits enjoyed by most Economic Activity Government Spending Unemployment
people in their society, they may be said to A healthy, balanced economy is one in As well as using monetary policy, it is The level of unemployment can
be ‘socially excluded’. Those who are which demand for goods and services is equally important for the government to undoubtedly have an impact on
 Topic 3 – The Impact of External Factors
What are external factors?
External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.
unemployed, for example, or those who do high enough to keep unemployment at manage the amount of money that it individuals’ personal finances, and on
not have a permanent address, or those an acceptably low level but is not so high raises in taxation, the amount that it their choice of products and services.
who have a poor credit history have often that it causes unacceptable levels of borrows on the financial markets, and High employment can lock people into a
found it difficult to open a bank account inflation. Economic activity in the UK is the overall amount that it spends. This is high-consuming lifestyle and it
or to take out a loan. fuelled by demand for the goods and known as ‘fiscal policy’. Whenever the encourages a consumer culture. It also
A society in which there is full social services from four main sources: government changes its policies on enables people to save money if they
inclusion is therefore one in which all ◆ consumer demand refers to the taxation, borrowing and / or spending, earn enough to have a surplus after they
members of society can participate. amount that individuals are spending on this has the potential to affect economic have satisfied their needs and everyday
the goods and services that they are activity. There are different opinions wants. People feel confident because
consuming, spending that is funded by among economists, politicians and they are earning money, and as a
consumers’ incomes, savings and political parties as to what should be consequence their needs, wants and
Interest rates and savings and borrowings; the ‘correct’, or ‘optimum’, levels of aspirations are probably less influenced
investments ◆ corporate demand is the amount that government spending and how much of by fears for the future than they might
While rising interest rates causes problems businesses are spending on the goods it should be financed by taxation or otherwise be. High unemployment
for borrowers, it is a different story for and services that they are consuming, borrowing. Put simply, if the amount makes for a very different market. The
savers. When Bank rate rises, banks and spending that is funded by a business’s spent by the government each year is long-term unemployed–defined as those
building societies can increase the interest revenue, savings and borrowing, and by more than the amount raised through who have been continuously
rates that they charge to borrowers and capital injections from its investors; taxation, then the government’s budget unemployed for more than 12 months –
increase the interest rates that they pay to ◆ government spending is the amount is said to be running a deficit, which has have to rely on state benefits for their
those who have deposited savings without that national and local government to be financed by government income and do not have the resources to
having to narrow profit margins. The main departments and agencies are spending borrowing. (Government borrowing is buy financial products, even though they
beneficiaries will be retired people and on the goods and services that they are largely funded by means of gilt edged may still need them. At times of high
others who rely on their savings to provide consuming, which spending is funded by securities, or ‘gilts’, which are bonds sold unemployment, even those who have a
an income. The majority of retired people tax revenues and government to investors and guarantee a set job probably feel uncertain about the
have paid off their mortgages and tend borrowings; and return on a set date.) Any borrowing that future.
not to have many other debts, so they will ◆ demand for exports refers to the is not immediately repaid is added to the
rarely be as badly affected by interest goods and services produced in the UK, overall government debt. The aim of Global Economy & Exchange Rates
rates going up on borrowing. Paying higher but sold overseas. most governments is to ‘balance’ the
One of the government’s key roles and budget (ie for spending to be equal to The effect on personal financial planning
interest rates to savers may also affect
objectives is to use the economic tools tax revenue) or to achieve an annual are changes in exchange rates (ie the
people’s attitudes to saving and borrowing
available to it to achieve and maintain surplus (ie revenue greater than purchasing power
– encouraging them to save more of their
full employment and low inflation. We spending). Most people accept, however, of the pound sterling against other
income rather than to spend it – which
have seen already that, on the one hand, that many governments – like currencies) and changes in the global
further adds to the downward pressure on
when inflation goes above the consumers – were encouraged by low economy.
demand and prices.
government’s 2 per cent target, interest interest rates and easily available credit These factors are considerably more
rates are increased to reduce consumer to borrow more and more in the years important now than they were 100 years
and corporate spending, putting running up to the financial crisis (leading ago
downward pressure on prices. On the to increasing budget deficits and because of the effect of ‘globalisation’ –
other hand, when prices are stable and outstanding debt). They used these ie the integration of the economies of
unemployment is growing because of a borrowings to finance significant individual countries around the world.
lack of demand, interest rates expansion in government spending –
may be reduced to make it to borrow. especially on education, public transport
and the health service.
Cultural Issues
Complying with Sharia Law Demographics
Refers not only to people’s ethnic and
religious backgrounds, but also more Under Islamic law, known as Sharia, it is Demographics involve analysing a
A fall in the stock market generally affects population in terms of age, sex,
generally to the social groups to which forbidden to charge or pay interest
the wealth of many people and businesses. ethnicity, culture, social status and
they belong or in which they were (Riba). If an urgent need arises for
Those who have invested directly in the geography – ie its demography. The
brought up. Our cultural backgrounds someone to pay for something and they
 Topic 3 – The Impact of External Factors
What are external factors?
External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.
stock market – by buying shares in tend to determine what ideas, beliefs, do not have enough money to do so, the demographic structure of a population
particular companies or by putting money values and attitudes were instilled into options available to them are to borrow and changes in that structure play a key
into collective investments, such as unit us as children, the overriding ideas of only from members of their own family role in the way in which providers design
trusts or OEICs – will suffer an immediate our peer groups and what is important to group or to use a Sharia-compliant and market their products, because the
reduction in wealth; many other individuals us in our lives generally. Cultural factors financial product. individuals who can be grouped under a
are also indirectly exposed to what affect people’s approaches to financial particular demographic heading may
happens in the market as a result of the services, helping to determine which Youth Culture have very different needs, wants and
effects on pension fund and insurance products they will buy and from which aspirations from those in another.
company fund investments. suppliers they will purchase them. They ‘Youth culture’ is the term used to
affect people’s needs, wants and describe the values shared by people in
their teens and early 20s. It embraces Technological Factors
Global Economy aspirations, and ultimately their
behaviour, including their financial everything from what you believe in to Technological factors include matters
The 2007–08 global financial crisis, yet behaviour. how you spend your leisure time and such as increased automation, the rate
again, illustrates clearly the impact of money. Changes in youth culture can of technological change and the
globalisation. A hundred years ago, the affect how young adults manage their influence of technology on outsourcing
collapse of the US sub-prime market in Multiculturism finances, and the kind of financial decisions. Technological shifts can affect
mortgage lending might have affected only Large sections of the UK population have products and services that they use. costs and quality of service, and can
banks and investors in the United States; family origins elsewhere in the world. lead to product innovation. The financial
in the present day, globalisation has Their values, attitudes and beliefs may Grey Culture services industry is directly affected by
resulted in an international financial be very different from those of people change in information and
services industry comprising many with other cultural backgrounds. Some Grey culture’ refers to the older section communication technologies (ICT). One
multinational banks, insurance companies people with family origins elsewhere of the population – ie those in late feature has been increased automation –
and other providers with offices scattered may not be able to identify with the middle age and older stages in the ie a computer doing something
across the globe providing services and traditional ways of doing things in the UK financial life cycle – which has been automatically that a person would
selling financial products to an enormous – and this means that there is a risk that getting bigger year by year across the formerly have done. The processes that
customer base. they will be excluded from using certain world’s industrialised countries in recent lend themselves to automation are those
financial products and services unless decades and will continue to do so for that are rules-based. The computer is
providers take cultural differences into the foreseeable future. given a set of rules via a software
Exchange Rates
account when they are designing, program and processes information or
Further factors that illustrate globalisation marketing and delivering those products Consumer Culture carries out tasks in accordance with
are the extent to which people regularly and services. those rules. Generally, these are jobs
travel abroad, either on holiday or on In the latter half of the twentieth
century, as standards of living rose and that need no judgement or discretion,
business, and the growth of imports and although the following points are worth
exports of raw materials, components, and Religion people in the industrialised world found
themselves with more disposable noting. A computer that works to a set of
semi-finished and finished goods. All of In many religions, lending and borrowing rules can make straightforward decisions
this activity has an impact on foreign money is seen as an acceptable activity income, a consumer culture emerged. A
consumer culture, or consumer society, based on those rules and it can put
currency exchange rates – particularly the provided that lenders treat borrowers borderline cases in a separate list, to be
value of the pound sterling (£) against the fairly and borrowers do not build up is ‘[a] society in which the buying and
selling of goods and services is the most referred to someone who can exercise
euro (€) and the US dollar ($). In today’s unsustainable levels of debt. judgement and make a decision. Credit
globalised economy, for example, a UK important social and economic activity’.
scoring is an example of an automated
manufacturer might buy raw materials way of making decisions.
from France, paying its French supplier in Legal Factors
euros, and export what it makes to the
Financial providers wanting to set up in Proceeds of crime and anti- Primary and Secondary Legislation -
United States, getting paid in US dollars. At
business need to ensure that they can terrorism legislation continued
the same time, it pays its UK costs, such as
comply with all applicable laws before These laws aim to stop criminals from ◆ the Financial Services and Markets Act
wages and rent, in pounds sterling.
they do so and, in particular, with laundering money (ie from using 2000;
financial legislation, such as the financial services to hide the proceeds of ◆ the Sale of Goods Acts 1979 and 2002;
Social Factors Financial Services and Markets Act 2000, ◆ the Transport Acts 2000 and 2001;
crimes), and to stop terrorists from using
When we refer to social factors in the the Consumer Credit Acts 1974 and financial services to collect and move ◆ the Unfair Terms in Consumer
Contracts Regulations 1999 (often
 Topic 3 – The Impact of External Factors
What are external factors?
External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.
context of financial services, we are 2006, the Banking Act 2009 and the their funds around. abbreviated as
referring to a wide range of cultural Financial Services Act 2012. The Banking the UTCCR 1999);
aspects, including changes in Act 2009 established a permanent Accounting Standards ◆ the Consumer Rights Act 2015; and
demographics, levels of employment and statutory regime for dealing with failing ◆ the Finance Act 2016.
home ownership. banks and makes new provisions for the Financial services providers must draw Until April 2014, the Office of Fair
governance of the Bank of England. The up their annual financial statements in Trading (OFT) and the Competition
Financial Services Act 2012 amends the accordance with International Commission were the government
Bank of England Act 1998, the Financial Accounting Standards (IASs). agencies responsible for enforcing the
Environmental Factors
Services and Markets Act 2000, and the relevant consumer protection provisions.
Although there are some scientists and Banking Act 2009. It also includes other On 31 March 2014, both of these bodies
politicians who take a different view, the provisions about financial services and As consumers of financial products and closed and their responsibilities in this
vast majority of environmental experts markets. services, individuals are also protected regard were divided between the
believe that the things we do and use by more generic consumer protection Financial Conduct Authority
every day – the products that we make, laws that give them rights, for example, FCA) and a new agency: the
the raw materials that we dig out of the to return faulty goods to the shop from Competition and Markets Authority
ground, the energy that we use in our Company Law which they bought them and get a full (CMA). This change was brought about
homes, factories, offices, vehicles, etc – This covers many aspects of how refund. under the Enterprise and Regulatory
are causing serious problems for the long- companies are set up and run, and how Reform Act 2013. [The CMA is]
term sustainability of the environment. they report on their affairs. There is also responsible for:
Primary and Secondary Legislation
Waste products from production processes partnership law for those businesses that ◆ investigating mergers which could
and from the consumption of goods can operate as partnerships. The primary and secondary legislation
(Acts and regulations, respectively) that restrict competition;
cause pollution; waste heat and ◆ conducting market studies and
‘greenhouse gas’ emissions contribute to are
relevant in the context of financial investigations where there may be
global warming, which causes damaging Employment Legislation competition and consumer problems;
climate change including melting ice caps services include:
This sets out rules on how employers ◆ the Courts and Legal Services Act ◆ investigating where there may be
and rising sea levels; rain forests are being breaches of UK or EU [competition
destroyed, and we are using up non- must treat their workers and what rights 1990;
the workers have. ◆ the Competition Act 1998; laws];
renewable sources of energy and other ◆ bringing criminal proceedings against
natural resources. These environmental ◆ the Consumer Credit Acts 1974 and
2006; individuals who commit [an
factors must be considered in relation to offence];
sustainable personal finances because, Tax Laws ◆ the Consumer Protection from Unfair
Trading Regulations 2008; ◆ enforcing consumer protection
whether or not individual consumers are These govern the taxes that individuals legislation to tackle practices and market
themselves concerned about the ◆ the Consumer Protection (Distance
and businesses must pay, and conditions that make it difficult for
environment, the financial products and Selling) Regulations 2000 (known simply
how they are calculated. consumers to exercise choice;
services that they buy will inevitably have as
an environmental impact. Financial the ‘Distance Selling Regulations’);
services providers are being encouraged ◆ the Enterprise Act 2002;
by regulators, government and non- ◆ the Estate Agents Act 1979;
government agencies, environmental
campaigners and pressure groups, among
others, to make their products more Analysing Data Sources
environmentally friendly. Banks, for
example, are under pressure to make
loans available on favourable terms to
companies that invest in developing green
technology and not to lend money to those
companies whose products or production
processes are non-sustainable. Insurance
companies, similarly, can make a
difference by charging lower premiums to
 Topic 3 – The Impact of External Factors
What are external factors?
External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.
people with more fuel-efficient cars and / Many of the PESTEL factors that we have
or cars with lower carbon emissions. discussed in this topic are quantifiable –
ie their values can be measured, and
differences or changes in those values
can be recorded and analysed. Data on
interest rates, levels of inflation or
unemployment, house ownership,
budget deficits and debts are just some
of the social and economic variables that
can be measured and presented in
tables, graphs, histograms, bar charts
and pie charts, etc. In the UK, huge
amounts of these statistical facts and
figures are collected and collated every
day by the Office for National Statistics
(ONS).

European Legislation
Membership of the European Union also
has implications for a country’s legislation, Key ideas in this topic
because the institution itself makes laws. ◆ Changes in external financial factors –
These take the form of either regulations things over which neither consumers
or directives, and they have to be applied nor providers have control – and their
in all of the member countries. impact on both consumers and
◆ Regulations are directly applicable in providers of financial services
member countries, including the UK. This ◆ Analysis of external factors using the
means that they become law in all EU PESTEL framework (‘political’,
member countries as soon as they come ‘economic’, ‘social’, ‘technological’,
into force, and that people and businesses ‘environmental’ and ‘legal’)
must comply with them immediately. ◆ The effect of international influences –
Such regulations apply to all EU members particularly the impact of globalisation
equally, with no variation of the law ◆ The presentation of the impact of
from one country to another. external financial factors in the form of
◆ Directives can be seen as instructions statistical tables, graphs and charts, to
issued by the European Commission to the aid easy understanding and accurate
governments of the EU member countries. analysis
Each member has to enact its own laws
to meet the requirements of the directive
within a set period (usually two years).
The exact rules can differ from one
member country to another, as long as
they
fulfil the requirements of the directive. In
other words, the directive sets out what
is to be achieved and the member country
can decide for itself how to achieve it.
There can be differences in how quickly
each member country brings a directive
into force, but they should result in a set of
 Topic 3 – The Impact of External Factors
What are external factors?
External factors are factors over which individuals have little or no control, but which nevertheless have significant effects on financial products and services, and therefore on people’s economic
well-being. The importance of these factors cannot be overstated, which is why this topic explores these factors in more detail and looks, in turn, at the impact that each can have on sustainable
personal finances.
minimum standards being established
across all EU member states.

Implementation of EU legislation in
the UK