Millions of people don’t understand financial terminology – and have signed financial contracts without knowing what they are agreeing to, according to new research.
One in six UK adults said they do not understand monetary terms such as ISA and AER – while a third have signed a financial contract without understanding the terms used.
Indeed, eight in 10 respondents believe banks use too much jargon and think the Government should take action against the financial institutions for doing so.
Loan provider Norton Finance surveyed 1,000 adults about their knowledge of finance-related terms commonly used by banks.
Keith Stringer, founder of Norton Finance, said: “It’s easy to sympathise with people who can’t get past the often impenetrable language that banks use.
“It’s clear that people want more to be done about how much jargon is used by banks – we’re seeing a huge majority wanting more action from public authorities to stem the issue.
“There’s a tie to the kind of language a financial establishment uses and trust, with more obtuse language leading to less trust in what they are providing.”
Two in five people admitted to having a sub-par understanding of financial jargon and four in 10 don’t trust banks that use the complicated terminology.
As part of the survey, participants were given a list of real and imaginary financial terms and asked to say whether they were real or not.
Around half of those polled thought the term ‘IVA’ was made-up and one in 10 didn’t believe ‘credit rating’ was a real term.
Of the imaginary jargon, nearly a quarter believed ‘core gouging’ was real and almost a third thought ‘Annual Sorting Rate’ was an actual financial term.
Keith Stringer, founder of Norton Finance, said: “It’s important to ask about any jargon that you’re not comfortable with – don’t be afraid to get an explanation.
“Also ensure that you read all terms and conditions in any financial contracts you sign, otherwise you could get stung by hidden fees.”
You can test your own understanding of financial terms by having a go at The Great Finance Jargon Quiz here: https://www.nortonfinance.co.uk/know-how/the-great-finance-jargon-quiz
