Finance information must be made easier

Key financial terms remain a mystery to many consumers according to new research. Figures show that 31% feel that banks or financial institutions should provide information and brochures that are easy to understand.

The research released today revealed that 17% of respondents did not understand the term SSIA despite recent heavy coverage in the media.

The research also found 28% did not understand credit rating and 37% did not understand equity.

There was good news for the government’s pension promotion campaign as the research found that with 94% said that they broadly understand what pensions are.

Familiarity with the terms decreased in correlation with the decreasing level of education received by the respondent.

However, difficulties in understanding financial terms are not confined to those from less advantaged backgrounds as only 52% of middle income adults understood the term APR.

The research, commissioned by National Adult Literacy Agency (NALA) in partnership with the EBS Building Society, found that just 31% of the population in Ireland feel they are well prepared financially to deal with unforeseen circumstances like illness or disability.

The level of preparedness rose to 39% when broken down to solely Dublin respondents, reducing to 26% among those from Connaught / Ulster.

Overall, this rises to 45% among those who are educated to 3rd level.

The survey also asked respondents what financial institutions could do to improve their relationship with them.

There was a large group of respondents in favour of the provision of more understandable literature with 31% looking for financial institutions to “provide information / brochures that are easy to understand”.

The need for privacy was also looked for as 33% said “provide a space for confidential help and advice” was important to them.

The research followed on from comprehensive research conducted last year under the EBS/NALA programme which looked at financial literacy as an issue amongst some key segments and groups within the Irish population.

In addition the research, found that 90% of respondents had a relationship with a bank or credit union.

The 10% of respondents who do not have a current relationship with a bank or credit union are more likely to be male, 15-24 years old, completed their education to primary level only and are living in a rural area.

The research is part of a three year campaign that has been developed through a partnership between EBS and NALA, with the objective to raise awareness of the issue of financial literacy amongst the financial services industry and members of the public.

John Stewart, National Adult Literacy Co-ordinator, said: “Financial institutions need to embrace plain English in relation to all printed communications and promotional material. They should also provide awareness training for frontline staff in relation to the many clients who do not understand financial jargon.

"Support for initiatives such as the Plain English mark will lead to greater understanding amongst consumers. Consumers will be clearer about what they are buying and as a result will be buying products more suitable to them and their lifestyle both now and in the future.”

Speaking today, Aidan Power, Head of Marketing, EBS Building Society said: “The research shows that there is still work to be done to ensure that financial institutions play their part in producing literature and information which are easily understood.

"Personal finance products are not always easy to understand and as the range of products increases, it’s important that financial organisations strive to make the area as user-friendly as possible. EBS produces all of our literature in Plain English, which is highlighted through the Plain English mark on our materials.”

NALA and EBS commissioned Millward Brown IMS to conduct the survey, which was conducted with 1,000 people from across the country over the age of 15.