Financial alienation: The cost of not understanding

A survey by online mortgage broker Hanito revealed that half of adults believe they have overpaid for something because they misunderstood the complicated jargon in an agreement, while a quarter admit to signing onto an agreement without really understanding it. The same study indicated that up to 58 percent of people have put off refinancing a mortgage because the process is so complicated, a decision with very real financial costs — up to £216 a month. The complexity of the fine print involved in mortgages serves to disempower and alienate customers. University of Nottingham linguists have indicated that some financial agreements are written using Ph.D-levels of verbal complexity. Even aside from the jargon, many people are stymied by the complex math required to fully understand all the numbers involved, with Cambridge and University College London declaring a crisis of financial literacy among the general public.

Key Takeaways:

Research from Habito suggests that one in four individuals has committed themselves to a financial contract without a full understanding of the jargon.
More than half of the polled suspected that they had overpaid, due to the lengthy and difficult contract wording.
More than half also put off switching their mortgage because of convoluted document language.

“That has a real financial cost. A study last year from L&C Mortgages suggested that 58 per cent of mortgage-holders had never remortgaged in order to save money, despite being able to save an average of £216 a month by switching to a better deal.”