Paying for jargon

Cents & Nonsense: If you remember the first time you received pocket money, or had a warm coin pressed into your palm by a relative, you'll remember the thrill of spending it, writes Margaret E. Ward

If, like me, you blew it all on sweets down the corner shop, you may also remember the tummy ache that followed. That said, it probably didn't prevent you from spending the next few shillings the same way.

As a nation, our personal finances have not changed much since then. Imagine four million children with sweaty coins in their hands waiting for the newsagent to open and you'll get the picture.

Surprisingly, a recent survey by an international consumer think-tank found we are financially sophisticated compared to our European counterparts. The Future Foundation's press release trumpets: " 'Shrewd' Irish, the largest consumers of personal finance information".

Let's take a look behind the survey's statements and statistics to see what these figures really say about our attitude toward money.

Thirty seven per cent of Irish people are likely to research financial services before shelling out for them, according to the survey.

Behind the scenes, this is what really happens: "Hi. Here's the cheque. I trust you [ broker, bank manager, accountant, friend], just go ahead with that. I don't need to look at your commission rates or whether or not you offer independent advice."

Fifty per cent of us borrow to buy stuff we want rather than paying off debt, according to the survey. Meaning: "Gimme that and that and, oh yes, it's gorgeous, that as well. Don't worry about the cost, I can just take out another loan against the equity in my home!"

We are apparently also the most likely in Europe to have a savings product while also being in debt.

That all too often translates as: "I pay 30 per cent on my store card, 18.9 per cent on my credit card but, hey I am really a saver. I get a whopping 4 per cent on my savings. Dirt tax? What's that? Call my cleaner."

Financial service providers are laughing all the way to the bank. Selling to the Irish public is like taking candy from a baby. It is just so damn easy.

The survey says on average, we own four financial products. That adds up to serious commission and fees. It's no wonder that Irish banks are among the most profitable in Europe.

WE ARE ALSO at the top of the table when it comes to trusting the advice offered by financial institutions, according to the survey. This is despite the sneaky equity SSIA exit charges, several bank-overcharging incidents, the Eircom debacle and Tony Taylor. Why is this? It makes no sense.

The reason is we don't understand finance, being too embarrassed, or too busy, to do anything about it. It is all very new, complex and takes ages to comprehend.

This is exactly what service providers would like you to believe. Loans, insurance, pensions and investments are not that complicated, but they are hard to compare, thanks to the language used and the product design. I've been writing about personal finance for nearly 10 years and, at times, I still scratch my head in wonder.

Thankfully, things are changing. Last summer, the Irish Financial Services Regulatory Authority released its long-awaited consumer protection code, which said: "A regulated entity must ensure that all information it provides to a consumer is clear and comprehensible."

Some organisations are taking steps to translate their materials into clear English to ensure readers understand them. Others are sitting back to see what, if anything, will happen if they don't.

There is something we can all do to ensure organisations use language that communicates rather than obscures. If you don't understand a product or service and no one can explain it to you in terms you do understand, don't even think about buying it. Simply walk away.

This applies to every service provider, from a stockbroker or a solicitor to a doctor or the Government. If people cannot express themselves clearly, can they actually know what they are talking about? It's unlikely. Would you really trust them to look after your money or your life?

Please let me know. Share your thoughts, triumphs, grievances and personal money stories. After all, this column is about you and your money.

• Margaret E. Ward is a journalist specialising in personal finance and consumer issues. She is also a director of Clear Ink, a professional writing, editing and training service. Email: cents@clearink.ie