23rd August 2014
Consumers are being bamboozled by jargon and technical language from banks and building societies, with only half of people knowing what an ISA is.
Research from National Savings & Investments (NS&I) shows that banks and building societies are at risk of losing customers because they bombard consumers with too much financial jargon.
NS&I’s Jargon Buster survey shows 67% of Britons know what a BACS payment is but only 37% know what AER (annual equivalent rate) means.
Over half, 55% know what the term ‘gross’ means but surprisingly only 53% known what an ISA (individual savings account) stands for.
Worryingly, 77% of people didn’t know what FSCS stands for; the Financial Services Compensation Scheme protects consumers and awards payouts in the event of mis-selling by a financial firm that cannot pay.
It seems the use of jargon is widespread in financial organisation, as people admitted to be confused by call centre staff, terminology in application forms, company website and phrases used in letters.
This tendency to use jargon could cost banks customers as over half, 60%, of people said they are likely to stop saving with a particular organisation if they can’t understand the language they used to explain terms and conditions and a firth said they find the language used confusing.
Julian Hynd, director of retail at NS&I, said customers should not disregard information provided to them by banks and building societies because it is laden with jargon.
‘It’s clear that customers are being bombarded with financial jargon, not only from their bank or building society but other financial services 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.’
What it means:
FSCS: Financial Services Compensation Scheme is the UK’s compensation scheme for customers of authorised financial service firms. The FSCS pays compensation in the event a company cannot pay a claim made against it.
ISA: individual savings accounts allow you to save £15,000 a year in cash or stocks and shares without paying an tax on the money you make.
AER: annual equivalent rate is the rate of interest that is calculated under the assumption that you leave interest to roll up in an account so the balance is higher.
BACS: formerly known as ‘bankers’ automated clearing services’, BACS is a scheme to electronically process money transfers in the UK.
Gross: if something is paid ‘gross’ it is paid out without taxes taken away. For example, a ‘gross’ salary is what you earn before tax, and after tax is your ‘net’ salary.