These Are the Financial Terms That Confuse Most Brits

From brokers to banks and everything in between, those who work in the financial sector tend to be pretty savvy with sector-specific jargon. With the general public, it is often an entirely different story.

More consumers than ever before are taking an active interest in their finances, but often admit that a lack of specialist industry knowledge can be daunting.

For the benefit of those within the sector, Uswitch recently conducted a survey involving just under 4,000 Brits. Their aim was to find out which financial terms are most confusing for the average UK citizen, which brought to light some interesting findings.

The following may therefore prove useful for brokers and financial service providers, who are likely to encounter customers unfamiliar with this terminology.

‘Blended Finance’ and ‘Cornerstone investment’ Top the Table

Right at the top of the rankings in terms of lack of understanding, the survey from Uswitch found that just 4% of people were familiar with the terms ‘Blended Finance’ and ‘Cornerstone investment’. The rest had no idea what either referred to.

Next in the list came ‘social enterprise’ and ‘Fintech’, both of which were recognised and at least partially understood by 13% of respondents. The lack of understanding with ‘Fintech’ in particular proved interesting, given how ‘Financial Technology’ refers to various everyday consumer staples like mobile banking.

While bridging finance activity in the UK may be hovering at an all-time high, just 14% of respondents were familiar with the term ‘bridging loan’ and the fundamentals of how bridging finance works.

Slightly further down the list came ‘CHAPS’ and ‘Hedge fund’, both of which were familiar to around 18% of respondents, while ‘annuity’ followed closely behind with 20% of people saying they know what it refers to and how annuities work.

Despite the fact that most of those taking part in the survey are likely to have savings accounts, only 23% knew that ‘AER’ refers to and means, the ‘Annual Equivalent Rate’ applicable to a savings account.

This was followed in the rankings by ‘Equity Loan’, understood by just 27% of respondents.

The Most Widely Recognised and Understood Financial Terms

At the opposite end of the table, the Uswitch survey also revealed which financial terms are most widely understood by the British public.

At the top of the rankings was ‘Pension’ with a score of 78%, though this suggests that a worrying 22% of Brits do not understand what a pension is or how it works. ‘Interest rates’ followed closely with 76%, though again this suggests that 24% of respondents are unfamiliar with what interest rates are.

An impressive 73% of respondents were familiar with ‘Crowdfunding’, which has become a popular activity for funding innovative projects over the last few years. 71% of respondents understood the term ‘credit score’ and its meaning, while 68% were familiar with what an ‘ISA’ is.

Slightly further down the rankings, ‘Investing’ achieved a score of 64%, followed by ‘Stock’ at 61%. ‘Net worth’ was also a relatively widely understood term with a score of 59% in the survey, which was followed by ‘repossession’ with 56% and ‘depreciation’ which was understood by 55% of respondents.

The report from Uswitch also revealed that the most commonly searched-for financial term online (by monthly average) was ‘stamp duty’, with around 7,300 people per month using the search term ‘what is stamp duty’.

jade-buswell

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