Money: A Mark of respect for the financial services customer

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The Independent Culture
When you buy an investment, do you understand the jargon? Or do you remain baffled, but ashamed to admit your ignorance? If so, you are not alone but, as John Andrew writes, help is at hand.

There is a small section in the recently published annual report of the Personal Investment Authority, the financial watchdog, which makes depressing reading: "Advertising claims are regulated and this no doubt curbs some wilder excesses but it can still be a very depressing experience to look through the material which actually meets the PIA's requirements."

The PIA's report explains that the regulator has seen a number of cases where, it believes, "colourful marketing stretches the spirit, if not the letter, of the PIA rules". It illustrates its point with cases of so-called guaranteed products where the small print qualifies the "guarantee" out of all recognition. The regulator is also not impressed with products that claim to have no charges or are supplied at no cost, when the small print explains that this only applies in certain cases.

The section concludes: "This problem goes beyond marketing spin to the actual industry jargon used. Consumers are confused by terms such as market level adjustment, bid/offer spreads or charging units. We do not believe the financial services sector needs to perpetuate the existence of the gobbledegook."

Last week at the Bank of England, the Money Management Council (MMC) launched a new Quality Mark initiative to help encourage the financial services industry to provide clear and accurate information to the public on money matters.

Marie Jennings, chairman and founder of the Council, says: "There is no doubt that much financial services literature is confusing, if not frightening. We intend to overcome this with our new Quality Mark scheme. In effect it is a benchmark of integrity and as such we believe it will be welcomed by both consumers and product providers."

Initially the scheme will only apply to generic literature, not marketing material. In other words, a booklet explaining PEPs as opposed to a brochure that explains the concept of the product and then promotes a particular company's PEP range.

Submitted material will be vetted by a committee of six individuals chaired by John Hosker, a former deputy director of the Consumers' Association and a member of the PIA's consumer panel. No charge will be made for the service, which is being financed by an pounds 80,000 donation from eight companies in the financial services industry.

This is an ambitious initiative that has a great deal to commend it. One of the main problems to be faced is that the MMC itself does not have a high profile. Indeed, sitting next to a leading figure from the regulatory world, I was asked: "Have you ever heard of the Money Management Council - I haven't." Few people have.

On the other hand, Chrissie Maher's Plain English Campaign (PEC) with its Crystal Mark is well known. While Chrissie had heard of the MMC's plans, she did not know about its Quality Mark.

However, there are no sour grapes: "The financial services industry is in such a mess, I'm glad to hear that others besides Plain English Campaign are nagging them to provide clear information to the public."

The PEC was launched in the 1970s with Chrissie shredding government documents in Parliament Square as a protest at their unintelligible language. The Campaign has come a long way since those days: "The public recognise our Crystal Mark. When they see it on a document, they know they can expect the information in it to be written clearly and intelligibly," she says. The PEC is a self-financing organisation which charges a fee for its services.

There is no doubt that there is a need for financial information to be improved so that it is not only crystal clear, but also honest, with nothing hidden, unwritten or understated. The comment in the PLA's report will go a long way to jolting the industry into becoming more transparent.

The new regulator, the Financial Services Authority, which is likely to assume its full powers in 1999, ants to assist consumers in making better-informed judgements. This is a clear indicator that it will expect the industry to follow the spirit as well as the letter of its rules.

Meanwhile the PEC and the MMC will fight the consumers' cause. Recently the PEC introduced its Honesty Crystal Mark to help ensure that there is nothing hidden, unwritten or understated in material. "We hope this will bring some trust back to the financial services market," Chrissie says. "After fiascos like the pensions mis-selling scandal something had to be done."

Although having two organisations independently carrying a torch for a better world is no bad thing, one cannot help but wonder whether their combined forces working towards the same goal would not have been even better. After all, the PEC is well known and has expertise in plain English, if not in the technical aspects of personal finance. While the members of the MMC's Quality Mark committee have financial expertise, they could no doubt benefit from the communication skills of PEC.

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