/ Money

Flummoxed by financial jargon? Send us your examples

Screen full of web code

Financial jargon – the flummery surrounding such products as bank accounts, insurance products and investments – is often unnecessary, and can be costly.

A previous investigation by Which? has shown that, when faced with terms and conditions documents of Proustian (or at least Shakespearean!) length and complexity, it’s understandably difficult for members of the public to locate important information.

We called for banks to present their T&Cs in clear, concise, well-indexed and jargon-free documents that are easy for their customers to use. But it doesn’t always feel like banks have moved forward in this area.

We still receive queries about confusing financial jargon, and recent studies by other organisations have shown that financial providers are still using complex words that are difficult to understand.

Jargon-free T&Cs

We think that in order for you, the consumer, to be able to make the right choice, the nature of your financial products needs to be clear so that you know what you’re getting in to. In banking, jargon-free T&Cs could lead to more switching, and a more competitive market in which consumer needs are paramount.

And it’s not just banking where this matters. My work on financial regrets found that investment regrets were the most common among our members, often because financial jargon prevented would-be investors from understanding the nature of the products they were buying into.

We’re now on the hunt for examples of financial jargon to distill, focusing on three areas – banking, investments and insurance – although we’re happy to hear about any others you may have.

We’re interested to find out which financial terms annoy and confuse you the most – as well as any examples of unnecessarily complex terms that you think could easily be boiled down.

So, what’s the worst example of financial jargon you’ve come across?

Comments
Profile photo of william
Member

Think it has to be “deficit halved”. With no explanation that they’re talking in terms of %age of GDP when the majority of people will be thinking in terms of the amount in which case the deficit hasn’t halved.

Profile photo of Patrick Taylor
Member

Flummery is not a word I would throw into an article on clarity. I doubt you mean to refer to the pudding or flattery so perhaps wordiness will be safer ! : )

Profile photo of malcolm r
Member

Obfuscation might be a more accurate pretentious word to use. However, in support of plain English, why not use derivatives of bewilder, mystify, puzzle, perplex, baffle, bemuse, befuddle.

Profile photo of wavechange
Member

What annoys me most is terms & conditions that go into so much detail that few people take the time to read them. I would like to see a clear summary setting out the key information with links or references to further relevant detail.

The insurance sector provides some good examples in which there is a simple explanation of what is covered, what is not, and what significant changes have taken place since the previous year.

Profile photo of Rickenbacker_Al
Member

Couldn’t agree more, and organisations guilty of this often increase our irritation by writing their T&C in dense ‘legalese’ which is almost impossible to follow. I have sometimes felt like writing to a company to suggest that if they wrote their conditions in Norwegian or Icelandic they would probably make just as much sense to ordinary punters. Banks are definitely the worst.

Member
Ray7033 says:
10 January 2015

I have just received a policy for house insurance which consisted of over 15 pages [I lost count!]. EIGHT pages were T&C in 4pt text. This is ridiculous. I am going to ask for a copy in at least 16 point as I am in my 80s and can’t see the letters let alone read them! I have no idea whether obfuscation is rampant or not but I have my ideas on that!

Profile photo of Patrick Taylor
Member

I have long thought that Which? as a service to subscribers, or possibly to society, should actually work on a database of T&C’s.

This could be a translation into English as she is spoke or examples of the intent as it might apply. There could be a marking for its clarity in general, suitability, and warnings on what is not covered or an abuse.

Obviously this is not a trivial exercise but I am quite happy that it could be accomplished with the right amount of carrot and stick with the insurers. Also as the Indian venture is over there is around £3m in the kitty for Which? to spend.

There only so many things that can apply to insurance policies as T&C’s. Furthermore it may be possible and sensible to standardise T&C’s. What could be nicer than a Which? seal of approval that the T&C’s for your particular insurer are not onerous together .

Profile photo of Beryl
Member

With new pension rules coming into force in April this year, unless people understand the tax implications of taking a lump sum and investing it, I predict they could be open to exploitation by rogue financial advisers and investment companies. I think a degree in finance will be necessary in order to find your way through the labyrinth of financial deals that are almost bound to be on offer.

Can anyone explain the purpose of bitcoins please.

Profile photo of Patrick Taylor
Member

I used to deal with people daily on their finances, and planning for the longer term is a great stretch for many and I am filled with forebodings how this will pan out.

You may have noticed that the head of the Citizens Advice Bureau Gillian Guy has recieved a CBE in the New Year Honours list. Given her ready agreement that CAB would explain the pension ramifications despite her staff being overwhelmed with work and untrained for this type of advice I am very disheartened and think this will not do very much for her 21500 volunteers.

Apparently when the announcement was made that CAB would be involved ….

” The criticism was leveled at Ms Guy for remarks she made when it was announced that Citizens Advice had been appointed to provide face-to-face pension advice to those affected by the changes. She is quoted as saying that ‘People who have diligently saved year after year towards their retirement deserve to choose how to make the most of their pension pot’ which is on the face of it an endorsement of government policy. So, does the [Private] Eye have a point?

Whether or not you agree with the new pension rules the Eye’s description of CAB volunteers in the article as ‘well-meaning but amateur’ is grossly misleading. They help thousands of people every year with complex benefits, debt, housing, consumer and a host of other problems.
Citizens Advice Waverley like every other bureau in the country is an independent charity affiliated to the central organisation headed by Gillian Guy. If each bureau is to be able to continue to provide its local community with information and advice in the face of ever-increasing demands it will require continued guidance and support from Citizens Advice nationally and while this requires leadership it cannot be exercised unilaterally.

Ms Guy and her team will therefore doubtless ensure that every bureau will be consulted regarding any additional training and resources necessary to deliver personal pensions advice. Guidance will also be required on how to avoid recommending financial products to clients so that they can continue to be confident the advice they receive is independent – commercially if not politically.

Over to you Ms Guy”

Profile photo of c nichol
Member

Dieseltaylor – agreed.

If CAB is to offer advice of any kind it should be from qualified people. PEYE describe it as “the next great pensions scandal and saddling her army of under-qualified volunteers with the task of guiding retirees on impossibly complex financial decisions”.

Will CAB give their recommendations in writing and will they be liable for the consequences? Doubt it. Perhaps Which? will carry out an undercover survey?

Maybe for safety CAB should simply say – “consult an independent financial advisor”. Or maybe we will have a nice surprise?

Profile photo of Patrick Taylor
Member

I have considered thta in fact CAB may actually only offer a very basic advice system … along the lines of what the terms mean and your likely mortality and the effects of inflation. : (

This would be advice but as to answering peoples real concerns that is a mighty big ask as there will be an expectation from the financially naive that you provide guidance enough for them to feel happy to take action.

If one did not have any other calls on your time and did not need to master the benefits, housing and other systems one might have a chance to train individuals. The unhappy fact though is that most people with large summs of money are very poor in projecting 20 years into the future.

From the Governments point of view perhaps it is a clever device to recover from these people money when they need hospital and home help services.

Profile photo of Beryl
Member

That’s a very good point you make DT. Pensioners with savings over £23,250 are not entitled to free home care, so the Government stands to gain from anyone contemplating taking a lump sum exceeding that amount from their pension fund when they would be forced into a situation whereby they would have to finance their own home care. A smart move by George O.

Profile photo of Patrick Taylor
Member

I know I surprised myself when I thought of the devious cleverness of it! : )

Profile photo of c nichol
Member

The best fact sheet I have found so far regarding assessing your eligibility for financial support for home care (and care home) is
http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS10_Paying_for_permanent_residential_care_fcs.pdf?dtrk=true

I could not find, however, how pension funds are treated. It would seem the income is taken into account (50% if a spouse is also supported) but is the pension pot (e.g. a SIPP) treated as savings? I raise this as the impending changes will allow you to withdraw up to 100% (less tax) in a lump sum. Does anyone know?

Profile photo of John Ward
Member

Ever since I read that the CABx are going to be given the role of helping people understand their options under the new freedom to cash-in your pension pot, I have been wondering how on earth they were going to be able to do it adequately and consistently across the country, as I know how stretched they are at present with inadequate offices, teams of willing but hard-pressed volunteers, and a lengthening queue of clients. I assumed the government was going to give them a grant to enable the employment of additional experts [are there such people just waiting for the call?] but I have seen no evidence of this. Another concern I have is that people might expect to get ‘advice’ from an advice bureau whereas the CABx or their agents might not be authorised to give ‘advice’ in its financial context. And it is genuine advice, guidance and support that people will need – not just fact sheets and lists of website links. Tipping out your pension pot is one of the most significant things a person could do; like making a will, you need to be of sound mind and judgment because the consequences are potentially formidable and irreversible. The tax liabilities are the easy bit to explain; the long-term implications require a very detailed fact-find and deep consideration that I wouldn’t queue up in an advice bureau to explore.

Profile photo of Beryl
Member

The nearest indicator I have come up with is at: theguardian.com Confused about your pension? Catherine Wykes 7th June 2014. It implies that our assumptions could be valid. It’s a good time to be a Financial Adviser I would guess!

Member
Jeff says:
10 January 2015

There is no such thing as a bad time to be a financial advisor. Since by the time everybody realises they have been sold yet another pup they have long flown off to their well feathered nests (Apologies for the mixed metaphors)

Member
Aydoan Bulleeveh says:
15 January 2015

Pensions jargon is the absolute worst by far. Examples:

‘Drawing your benefits’
‘Flexi-access drawdown’
‘Defined contribution’
‘Annuity/annuitise/annuitisation’
‘Crystallisation’

Little wonder people haven’t a clue with language like that.

Member
Graham Miller says:
22 February 2015

I opened a stock and shares ISA with Alliance Trust last year and when I realised that there had been no interest added I contacted them. I hadn’t realised as it wasn’t clear that I had to take steps to nominate the stocks and shares I wanted to include. Alliance Trust couldn’t care less when I reached out to them. My feeling is that this should have been made clearer but also that they, thats Alliance Trust, have a duty of care here and should have picked up that i as a new customer had lodged funds but had done nothing with them. Of course that would not have been in their interests as they have had my money for a year. Rather than a tax efficent investment I lost money. Alliance Trust received quite good press but I have now withdrawn funds and would not work with them as I’d naively thought there were more reponsible than other financial providers. I really believed that they would have righted what I thought was a wrong but instead I got a copy of terms and conditions. Can’t help but think that the first truly ethical and open financial institution that steps up could corner most of the market and quickly.

Member
W john Owen says:
23 February 2015

I’m not sure that I am in the correct area but would greatly appreciate advice
I still hold shares in the now ,non operational company,N M T ,(New Medical Technology ) .After a few years of low value ,out of the blue I have received a good offer from a USA based financial company ,Kingsoft Industries.
How do I check this out and safeguard myself?
W John Owen

Profile photo of Patrick Taylor
Member

Whenever I have received them I have believed they are a scam. If you wish to play along do so but DO not provide bank account details or pay any money or a telephone number. And scammers can be exceedingly persuasive. I had an ex-bank friend pay over £18,000.

In theory a dormant company may be a cheap way to gain a shell but when it involves forign companies it is very unlikely to be honest.

Kingsoft Industries appears highly unlikely given its Brazilian base and US sub-office. It appears to link to another Kingsoft of China and I doubt there is a real commercial link between them.

Member
Gretal says:
4 March 2015

I have just taken out a Premier single trip travel insurance policy with LV= as recommended by Which? On receipt of my documents I read through them as recommended & in the accompanying Document of Travel Insurance came across the following gobbledegook:

16 The failure or fear of failure or inability of any equipment or any computer program, whether or not you own it, to recognise or to correctly interpret or process any date as the true or correct date, or to continue to work correctly beyond that date (except under section D: emergency medical & associated expenses, section E: personal accident and section K: additional transport and/or accommodations costs).

I rang LV= to ask for an explanation but the agent who answered my call admitted he had absolutely no idea what it meant. He forwarded my query to the technical department who similarly had no idea. They referred it to the underwriters who sent an ‘explanation’ which the Travel Sales Representative still could not understand & went back to them for further clarification as she felt it wasn’t acceptable to pass to a customer. The matter was then passed back to the underwriters who have come up with the following explanation & have said they’re going to re-write this clause:

When it was 1999 and there was a fear that all computers were going to not cope when the date went to ’00, and worried if nothing was going to work. This clause has stayed in our policy to cover us if this happens again and if all electronic clocks and calendars went down and nobody could tell the date or time and flights, holidays and trips were cancelled/delayed/missed etc if this happened.

I pointed out your campaign & also that they were one of your Recommended Providers & suggested that if their own staff couldn’t understand their jargon then it probably had no place in the policy wording. They thanked me for bringing it to their attention & have said the underwriters have agreed the clause should be re-written, however there are no plans to update existing policy holders.

I’ve suggested they might like to refund my premium as a goodwill gesture!

Profile photo of John Ward
Member

Policies seem to be peppered with those contingency exclusions that you hope are just dormant but can be resurrected and invoked against you. I would regard it as void for uncertainty. Atleast you actually received some documents – most insurers only provide an on-line policy document which is usually not formatted for printing-off as a manageable document, but which [according to clause seventy-four] you have to carry with you at all times while abroad.

Profile photo of Patrick Taylor
Member

Congratulation Gretal on being an active consumer. : )

It is astonishing how sloppy firms can be. I recall a standard HSBC legal document that could not get “principle” correct. Pathetic.

I think you should get an award – something Which? ought to get around to even if LVFS felt unable. Perhaps if you offered LV an advice service call for the year 2999 to put back the clause they would have been more forthcoming.!!

Profile photo of Patrick Taylor
Member

This may not be strictly financial but as it affects millions and Which ? …… but it will be financial soon:

“Facebook’s plans for a mobile payments system using its Facebook Messenger iPhone app have been revealed by screenshots from hidden features of the app.
The screenshots and code from the app show a method for adding a credit or debit card to a Facebook account and the ability to send money to friends via messages.”

In a report 25th February the Belgian authorities state that Facebook is not operating as it ought:

” ……………………The team has publicly published their findings in a report titled: From social media service to advertising network—a critical analysis of Facebook’s Revised Policies and Terms.
In the report, the authors note that the changes made to the terms of service agreement on Facebook recently were minor—instead what Facebook has done is make its practices more explicit. But that has only highlighted, the authors assert, the illegality of the agreement and what the company does with user data. Their chief concern is that Facebook expects too much of its users by forcing them to read, understand and amend a host of settings in order to maintain the privacy levels they desire. They also note that ambiguous language often makes it nearly impossible for users to understand what it is they are agreeing to—such as when agreeing to allow images they post to be used for advertising purposes—which images, and for what purpose are not made clear. There is also mention of third party involvement, with no mention of who those third parties might be or what rights they are granted to private data or images.
The authors also take exception to the either/or option users face with the user agreement—either agree to the terms Facebook outlines, or access is denied—they suggest this violates “freely given” clauses in European law. To be valid, such an agreement needs to allow for consent to be “specific, informed and unambiguous,” they claim. ………………… “