FSA compiles list of banned words for financial brochures

FSA compiles list of banned words for financial brochures




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As part of its drive to treat customers fairly, the Financial Services Authority (FSA) has said in a paper that complex language and data shouldn’t be used in investment brochures and documents as it stops consumers from properly digesting the information. 

Words such as “liquidity”, “equity” and “stabilisation” should be avoided, having been labelled “grandiose and ambiguous” by the regulator.

 

The FSA has suggested that short, concise sentences with clear sub headings and colourful graphs should replace large blocks of text so that financial companies don’t mislead consumers with technical language.

 

However, financial professionals have been taken aback by this latest piece of advice, with many saying that the brochures contain necessary information and data, and are normally read by people with advisers and lawyers.

 

Steven Francis, a former FSA enforcement manager, said: “This is bizarre given that the FSA uses the most obscure language and is one of the worst jargon-users of all regulators.”

 

FSA Chairman, Lord Turner, used the word “liquidity” a total of 187 times in his paper, the Turner Report, in March.

 

The FSA has said that the guidance relates specifically to consumers, and such words will continue to be used when talking to industry practitioners.  

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