POTENTIAL 2026/2027 LIBF EXAM QUESTIONS || ANSWERED
PERFECTLY 100%.
Identify five reasons for the likely continued growth in the membership of credit unions. (5
marks) correct answers •Owned and controlled by their members (co-operatives/mutual
organisations) so the members have a say in how it is run
•Members are linked by a common bond so the service feels more personal
•Provide services for those who otherwise might have difficulty because of poor credit ratings
meaning that it is more accessable
•Allow people who don't have bank accounts to access facilities helping with financial inclusion
•They are non-profit organisations and do not have to pay shareholders meaning that they are
able to provide good rates of return and cheap borrowing options
•A much cheaper alternative to payday loans
•People can learn the value of sensible financial making decisions
Analyse the possible effects of external influences on somebody in the retirement life stage of the
personal life cycle. (5 marks) correct answers Longer life cycle due to better living conditions
and medical advancements
•Require a source of income for longer
•Pensions may decrease and age may increase
Overall increase in unemployment because of things like automation and business failures
•Less likely to be able to get a part-time job
Overall increasement in employment opportunities
•More likely to be able to get a part-time job although with some exceptions before it affects SP.
Increased bank rate
•If a private pension is stored in a variable rate savings account, they will gain more return.
Decreased bank rate
•If a private pension is stored in a variable savings account, they will get less interest
,Describe why there has been a decline in the use of cheques to make payments. (5 marks) correct
answers •Not always accepted because, since the cheque guarantee scheme was withdrawn in
2011, there is no guarantee of payment because they can 'bounce' so people are only willing to
accept them from people they trust.
•It can take a number of days after the cheque has been deposited for the money to be accessible
to the intended recipient, i.e. to clear
•It is more expensive to be used in situations where the transaction is not made face to face e.g.
online
•Other methods are easier to use, for example, bacs and faster payments system because of
improvements in technology
•Increased globalisation - it cannot be used overseas so people use foreign bank drafts instead
Describe using examples the sources and frequency of unearned income that might be used when
constructing a personal budget. (5 marks) correct answers •Interest on savings is only paid
annually
•Returns in investments such as dividends, are usually paid out quarterly or twice a year,
although they might not always be paid e.g. dividends if the business is struggling, however, the
most often do because they need to make shareholders happy
•One-off payments, or windfalls, could include an inheritance or winning the lottery.
•State pension, in the UK, is paid every four weeks.
•Allowances may be paid by family members may be paid weekly or monthly
•Financial gifts, such as birthday or Christmas gifts may be received on these celebration days
State five principles in the Standard of Lending Practice that relate to information given to
customers. (5 marks) correct answers •Clear, fair and not misleading information
•Give customers information before, during and after point of sale about how products work.
•Inform customers about any changes made to their products/services.
•Only giving information about relevant/suitable products.
•Dealing with customer complaints quickly and sympathetically.
, Describe the role of the four parties involved in making a credit card transaction. correct answers
•Cardholder - pays with card and pays the transaction after receiving the statement from the
issuer
•Merchant - sends transaction details to the acquirer and accepts the payment after they receive
the payment from the acquirer
•Acquirer -passes on traction details from the merchant to the issuer and pays the transaction
after the issuer pays them
•Issuer - sends statement to the cardholder after they receive the transaction details from the
acquirer and pays the acquirer after the cardholder pays them
Compare the advantages and disadvantages of making payments which debit card and pre-paid
travel card while abroad. (5 marks) correct answers •They can both be used to withdraw money
from ATMs or branches in local currency - these are both two very useful features, especially
ATMs.
•One disadvantage for both pre-paid travel cards and using debit cards is that they can only be
used with merchants that display the brand, and you also have to pay fees for both of them when
using them abroad.
•Debit card is cheaper as although they both charge fees, they don't usually charge set up fees for
setting-up the card, whereas you do for pre-paid travel cards as well as the fees converting the
currency.
•Pre-paid travel card is better because it is not linked to a bank account, so it is less risky to carry
around, whereas if you lose a debit card abroad, you could lose all your money
Analyse why the use of cards is rising and the use of cash is falling in the UK today. (5 marks)
correct answers •Face-to-face situations are being less common as online shopping is becoming
more common.
•Sellers often prefer card because it is cheaper for them, for example, larger companies often
have to pay for security to transport the money
•Carrying large amounts of cash can be risky because it is easier to lose or have it stolen
•Contactless payment is safer, especially in circumstances where there is a pandemic, for
example.
•Merchants can be assured that the money is genuine, through the authorisation process, unlike
cash where counterfeit can happen.
PERFECTLY 100%.
Identify five reasons for the likely continued growth in the membership of credit unions. (5
marks) correct answers •Owned and controlled by their members (co-operatives/mutual
organisations) so the members have a say in how it is run
•Members are linked by a common bond so the service feels more personal
•Provide services for those who otherwise might have difficulty because of poor credit ratings
meaning that it is more accessable
•Allow people who don't have bank accounts to access facilities helping with financial inclusion
•They are non-profit organisations and do not have to pay shareholders meaning that they are
able to provide good rates of return and cheap borrowing options
•A much cheaper alternative to payday loans
•People can learn the value of sensible financial making decisions
Analyse the possible effects of external influences on somebody in the retirement life stage of the
personal life cycle. (5 marks) correct answers Longer life cycle due to better living conditions
and medical advancements
•Require a source of income for longer
•Pensions may decrease and age may increase
Overall increase in unemployment because of things like automation and business failures
•Less likely to be able to get a part-time job
Overall increasement in employment opportunities
•More likely to be able to get a part-time job although with some exceptions before it affects SP.
Increased bank rate
•If a private pension is stored in a variable rate savings account, they will gain more return.
Decreased bank rate
•If a private pension is stored in a variable savings account, they will get less interest
,Describe why there has been a decline in the use of cheques to make payments. (5 marks) correct
answers •Not always accepted because, since the cheque guarantee scheme was withdrawn in
2011, there is no guarantee of payment because they can 'bounce' so people are only willing to
accept them from people they trust.
•It can take a number of days after the cheque has been deposited for the money to be accessible
to the intended recipient, i.e. to clear
•It is more expensive to be used in situations where the transaction is not made face to face e.g.
online
•Other methods are easier to use, for example, bacs and faster payments system because of
improvements in technology
•Increased globalisation - it cannot be used overseas so people use foreign bank drafts instead
Describe using examples the sources and frequency of unearned income that might be used when
constructing a personal budget. (5 marks) correct answers •Interest on savings is only paid
annually
•Returns in investments such as dividends, are usually paid out quarterly or twice a year,
although they might not always be paid e.g. dividends if the business is struggling, however, the
most often do because they need to make shareholders happy
•One-off payments, or windfalls, could include an inheritance or winning the lottery.
•State pension, in the UK, is paid every four weeks.
•Allowances may be paid by family members may be paid weekly or monthly
•Financial gifts, such as birthday or Christmas gifts may be received on these celebration days
State five principles in the Standard of Lending Practice that relate to information given to
customers. (5 marks) correct answers •Clear, fair and not misleading information
•Give customers information before, during and after point of sale about how products work.
•Inform customers about any changes made to their products/services.
•Only giving information about relevant/suitable products.
•Dealing with customer complaints quickly and sympathetically.
, Describe the role of the four parties involved in making a credit card transaction. correct answers
•Cardholder - pays with card and pays the transaction after receiving the statement from the
issuer
•Merchant - sends transaction details to the acquirer and accepts the payment after they receive
the payment from the acquirer
•Acquirer -passes on traction details from the merchant to the issuer and pays the transaction
after the issuer pays them
•Issuer - sends statement to the cardholder after they receive the transaction details from the
acquirer and pays the acquirer after the cardholder pays them
Compare the advantages and disadvantages of making payments which debit card and pre-paid
travel card while abroad. (5 marks) correct answers •They can both be used to withdraw money
from ATMs or branches in local currency - these are both two very useful features, especially
ATMs.
•One disadvantage for both pre-paid travel cards and using debit cards is that they can only be
used with merchants that display the brand, and you also have to pay fees for both of them when
using them abroad.
•Debit card is cheaper as although they both charge fees, they don't usually charge set up fees for
setting-up the card, whereas you do for pre-paid travel cards as well as the fees converting the
currency.
•Pre-paid travel card is better because it is not linked to a bank account, so it is less risky to carry
around, whereas if you lose a debit card abroad, you could lose all your money
Analyse why the use of cards is rising and the use of cash is falling in the UK today. (5 marks)
correct answers •Face-to-face situations are being less common as online shopping is becoming
more common.
•Sellers often prefer card because it is cheaper for them, for example, larger companies often
have to pay for security to transport the money
•Carrying large amounts of cash can be risky because it is easier to lose or have it stolen
•Contactless payment is safer, especially in circumstances where there is a pandemic, for
example.
•Merchants can be assured that the money is genuine, through the authorisation process, unlike
cash where counterfeit can happen.
