Financial jargon deters consumers from financial planning, says adviser

The choice of language used in financial statements plays a key role in consumers’ understanding of expenditure and finances and failure to monitor personal finances, according to Alpha Financial Management.

Stephen Lee, director of Liverpool-based Alpha Financial Management, said the choice of language on energy and utility bills left much to be desired and could be deterring some consumers from properly monitoring their expenses.

He added that the likelihood of consumers checking their household bills was further reduced if they didn’t have a basic grasp of their bank statements, underscoring the need for proper attention to personal finance.

‘If they are not going through their bank statements, they are hardly going to be reading their utility bills,’ said Lee.

His views have been supported by the findings of a survey carried out by energy switching service uSwitch. In a survey of over 2,700 people, more than three quarters of participants showed they were unable to understand a simple energy bill.

Just under 2,400 participants, or 86%, failed to make a mocked-up energy bill add up correctly despite being able to use a calculator and take notes.

Ann Robinson, director of consumer policy at uSwitch, said the results showed such bills needed to be reworded so that consumers would understand them more easily.

‘You should not need to be an ‘A’ grade student to be able to understand your energy bills. It is deeply worrying that only 14% of people have passed what should be a straightforward test,’ she said.

The organisation has collected signatures from more than 7,000 consumer petitioning for energy bills to be made ‘simpler, clearer and easier’.