Finance jargon 'puts off customers'

Updated
piggy bank
piggy bank

Banks and building societies are driving customers away by bombarding them with financial jargon, research carried out for Treasury-backed body NS&I has found.

Overall, women are more confused by financial terms than men, the research suggests. For example, 56% of men said they understand what an Isa (individual savings account) is for, compared with just half (50%) of women.

One third (33%) of Britons surveyed were baffled when asked what a Bacs payment is, while nearly two-thirds (62%) do not know what AER (annual equivalent rate - used to help people compare returns on savings accounts) means.

Bacs is a central payment system used to process several different types of electronic payment, such as wages and pensions.

Three-quarters (77%) of Britons were flummoxed by the term FSCS. This stands for Financial Services Compensation Scheme, which acts as a safety net for people whose bank or building society goes bust, and will compensate a consumer by up to £85,000.

Almost half (45%) of people did not know that gross interest refers to interest that is paid before the deduction of tax.

NS&I, whose financial products are 100% secure because the provider is backed by the Treasury, said the findings underline why it is important for firms in terms of hanging on to their customers to use easy-to-understand language.

Three-fifths (60%) of consumers said they are likely to stop saving with a particular bank or building society if they cannot understand the way they explain their terms and conditions and more than half (54%) said confusing language would make them consider switching their custom to another firm.

Nearly one in five (18%) of people strongly agreed that they find language used in product brochures confusing.

Looking at sources of confusion for consumers, 41% of people said this was caused by call centre staff, 49% highlighted terminology in application forms, 50% were baffled by jargon used on company websites and 51% found phrases used in letters were confusing.

One quarter (25%) of Britons who found company websites confusing said this had stopped them from saving with a particular bank or building society.

Julian Hynd, director of retail at NS&I, said: "It's clear that customers are being bombarded with financial jargon, not only from their bank/building society but other financial service providers too.

"But it's important for customers to remember that although the information supplied to them won't be a riveting read, it will provide essential information relevant to them."

More than 1,000 adults were surveyed by TNS for the research in July.

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