Financial groups urged to cut the jargon

Financial products can be complex, so the vast tract of tiny text with the title "terms and conditions" should give consumers instant answers to all their questions.

But impenetrable, jargon-laced sentences often leave consumers even more confused by the time they finish reading, which is usually about three paragraphs later, when they pause to reach for the paracetamol or a pillow.

Research from Irish Life suggests that seven out of 10 people are so committed to staying awake and headache-free during daylight hours that they don't bother reading financial brochures at all.

"They say it is incomprehensible, meaningless jargon. In our industry, that's just a disaster. We're selling an intangible product. Our brochures are all we have got," says Siobhán Kelly of Irish Life.

From Monday, the life assurance and investment company is holding a Plain English Week to publicise the "Honesty Mark" it has received for its core product brochures, policy terms and conditions, and benefit statements.

The Honesty Mark is granted by the UK-based Plain English Campaign, an organisation committed to fighting for language free of jargon.

According to the Plain English Campaign's website, it is the financial services industry, alongside the legal profession, that causes the most confusion.

The Plain English Campaign, an independent organisation, provides editing services and training facilities to companies. Out of more than 1,000 active clients, 18 per cent are financial services companies, according to John Wild of the organisation.

The Plain English Campaign's "Crystal Mark" is internationally recognised as a symbol of clarity.

But the Honesty Mark goes further, certifying that the product documents contain no misleading information. Everything the consumer needs to know is contained in the terms and conditions.

"The company secretary has to sign a legal declaration saying what you see is what you get," says Wild.

The Plain English Campaign shames organisations that publish or distribute particularly nonsensical, convoluted documents that only serve to alienate the target audience.

In June, the body lobbied Malcolm Glazer, unloved buyer of Manchester United, to produce a clear summary of the 74-page bid document that was issued to shareholders.

The group rewrote one section of the bid document to clearly explain the details of Glazer's offer to buy the shareholders' shares in the club.

This included explaining legalistic and financial jargon such as "lien", "encumbrances" and "unamortised balance" as well as translating the Latin phrase "mutatis mutandis", all of which were included in the original document.

"You can't fight what you don't understand," the Plain English Campaign advised the share-owning supporters who wanted to stop the takeover in its tracks.

So have financial services companies and all of those involved in financial transactions made their product literature deliberately confusing in order to obscure the true nature of what they are selling?

Wild believes a lack of plain English was partly to blame for the endowment mortgage scandal, in which up to five million people were mis-sold mortgages where the loan was supposed to be paid off by the proceeds of a long-term investment policy.

Most policies did not grow in value at the expected rate, leaving homeowners with painful shortfalls, unable to clear their mortgage.

"People didn't read the small print and they were misled. They thought the policy could only go up in value. They didn't think it could possibly go down," says Wild.

The National Adult Literacy Agency (Nala) believes the use of convoluted language in financial services literature can create a climate where mis-selling and mis-buying abound. Plain English, on the other hand, promotes trust and transparency, says agency director Inez Bailey.

"It helps build consumer trust if they feel the information is being presented clearly and without distraction and there are no hidden charges tucked in there somewhere," she says.

Nala launched its own plain English quality mark in June and so far two financial services organisations - EBS Building Society and Irish Life - have received the award.

Nala has also worked closely with the financial regulator and other organisations have used or expressed interest in its plain English services.

But there is still a long way to go, says Bailey.

"Plain English has become normal practice in the US, the UK, Australia and Canada. In Ireland we are lagging behind," she says.

Nala research due to be released later this month shows that many of the common abbreviations and legal terms that are used by financial services firms are not understood by the general public.

Bailey says Nala is now hoping the financial regulator will make a certain standard of plain English mandatory.

Old habits are hard to shake off. "The industry has been around for 200 years and the language has been around for 200 years, too. It's a hard thing to change," says Kelly of Irish Life.

Financial products such as pensions and investment policies are undeniably complex by nature. But no company wants complaints from consumers who simply didn't understand the products they were buying, adds Kelly, which is why Irish Life started to rewrite all of its product literature in 1998, stripping it of jargon.

Irish Life's next initiative is the "product snapshot", the result of the marketing rule of thumb that says companies have only five seconds to grab the attention of potential customers.

"It's a very simple label to say what the aims of the product are, the risk attached, the funds available, the time period," says Kelly.

Financial services companies are beginning to realise that they can both make money and save money by ditching the big words, Wild says.

The first financial institution to realise the marketing value of plain English was Citibank, which in the 1980s saw sales of a pension policy increase 125 per cent in 12 months following the conversion of the product literature into plain English.

Organisations are also discovering that they can cut down the time they spend answering queries if they make the information clear in the first place, Wild adds.

In the UK, the Inland Revenue has calculated that it costs approximately €6 to answer a query in writing. "And they get tens of thousands of queries a week."

As Bailey notes, one quarter of the Irish adult population is estimated to have literacy difficulties. "Companies that use unnecessarily flowery language rule out a potential audience. There's no point in putting leaflets through their letterbox if they can't understand them."