The FCA has warned the Financial Services Sector to ‘stop using jargon’ and over complicated information that often confuses customers. The regulatory body has argued that technical small print filled with complex language is too hard for customers to understand and is damaging for the financial sector as a whole. They have urged banks and other financial firms to provide information in a more creative and helpful manner; as opposed to sending reams of obscure fine print.
Speak to Your Customers, Not at Them
The small print of any agreement often contains very important information that is legally required, yet customers are not always financially literate and therefore struggle to understand the information provided. This also means they do not thoroughly understand what they are buying.
The FCA has argued that the information provided should be in the best interest of both companies and customers. Less jargon will lead to better understanding and therefore fewer complaints later down the line as satisfied customers know exactly what they are buying from the very beginning.
Transparency is Key
Communication is extremely important in the financial sector, whilst clarity provides reassurance and trust value. The FCA has advised using videos and infographics as an alternative method of supplying information, allowing customers to understand the fine details better. Transparency is an extremely important factor when it comes to a customer making a decision.
At Wellesley & Co, we ensure our Peer-to-Peer Lending Platform is open and transparent by displaying the risks involved and by explaining our model and products. Lenders are fully informed that invested capital is at risk if a borrower defaults and interest payments are not guaranteed. We also inform all customers that Peer-to-Peer Lending is not covered by the Financial Services Compensation Scheme (FSCS).
Is the FCA Partly to Blame?
Despite warning the financial industry to change the way it communicates with its customers, the FCA may just be as guilty of the same wrongdoing. The regulator has openly admitted that its own instructions sent to firms can be just as confusing and act as part of the wider problem.
Nevertheless, a fear of moving away from the legally tried and tested small print has prevented some firms from becoming ‘more creative’ in their approach to communications.
Wellesley aim to be articulate in all areas of business. We are constantly following FCA guidance and utilising alternative methods to effectively communicate with customers. We have a television advertisement, a range of product videos and display case studies to illustrate our business model to ensure customers both present and prospective understand our business model, how we manage funds and ever so importantly, the associated risks. We pride ourselves on our effective customer service and have a dedicated Customer Service Team available via telephone (0800 888 6001), email ([email protected]) and online chat to discuss what we do.