Obscure financial jargon leads to ruin

Diana Burns, November 2010

Our Document Clarity Team manager Anne-Marie Chisnall and Plain English specialist Diana Burns have just returned from the Clarity international plain language conference in Portugal. Clarity’s a worldwide organisation that focuses on increasing plain language in the law, in place of legalese.

Here are Diana's notes from the presentation by Neil James on financial jargon.

Obscure financial jargon leds to ruin

Much of the blame for the current financial crisis can be placed on banks and finance companies using language that people didn’t understand — until it was too late. The essence of a hard-hitting presentation by Write’s Australian colleague Neil James to the Clarity conference was that ‘the essence of the sub-prime mortgage debacle was people signing up for loans that they didn’t understand.’

Neil James says people’s lack of understanding of their financial documents was a ticking time bomb. Banks and finance companies deliberately used obscure, complex language, he alleges.

‘Lots of financial prospectuses had sentences that were pages long — a wall of words.’

Warren Buffett, a financial guru, admitted shortly before the crisis broke that ‘nobody knows what the hell they’re doing’. Neil James also quoted Alan Greenspan, former Chairman of the United States’ Federal Reserve, as saying ‘since I’ve become a central banker, I’ve learned to mumble with great coherence.’

That mumbling, combined with what James calls ‘financial spin’, meant that ordinary people were confused and misguided about what was going on with their loans. Lack of clarity in written documents also meant it was hard for the public and the US Government to hold bankers and financial companies to account.

‘Financial transparency in closely linked to plain language’, says Neil James.
 

Diana Burns is one of Write's plain English specialists

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