KIDs ‘harder to read than Moby Dick’

Key Information Documents provided to investors cannot be understood by the majority of them, a new study has found.

The documents are required under the Priips regulation in force since January, and are designed to allow the average person to compare products across the market with information on charges, risks and future performance scenarios.

Software company Visible Thread used artificial intelligence and natural language processing to analyse 200 KIDs across 40 financial services organisations.

Its research found that 97.5 per cent of KIDs are inaccessible to 61 per cent of the UK population based on levels of literacy skills.

The worst 10 performers make KIDs harder to read than an academic paper on chess, it argues.

The bottom 10 KIDs were scored a 38 on the Flesch Reading Ease Test, compared to a score of 58 for a novel like Moby Dick and 73 for Harry Potter.

The bottom 10 only just came ahead of a score of 30 for the Harvard Law Review.

The three worst performers were Old Mutual Wealth Life Assurance, Axa Investment Managers, and Capital Group.

The analysis concludes: “Scanning a KID leaves the average reader perplexed. The consumer risks being mis-sold products they don’t understand. They can make poor investment decisions on the basis of a confusing KID.

“Just consider the acronyms and jargon surrounding this well-intentioned document. KIDs and Priips alone mean nothing to someone outside the financial industry.”

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Maybe worth noting this is what Andrew Bailey said last night:

    “If I had to name an area where I would criticise the EU approach, it is the ability to amend and adjust and recognise the need to do so more rapidly. And, as evidence, I will introduce the Packaged Retail and Insurance-based Investment Products Regulation, PRIIPS to its fans. The aim of transparency and comparability of investment products is important, and we share it, but PRIIPS doesn’t work as well as it needs to. That’s just a fact of life. It’s why we have launched a Call for Input on PRIIPS to get a more extensive picture of the issues.”

  2. This completely supports what clients tell us. Well-intentioned documents are confusing the heck out of people. Smart people. Well educated people who just don’t speak money-gibberish. Our sector does seem to ‘hijack’ words from the dictionary and give them different meanings – which confuses people too. Part of our role is to translate them into plain English – although sometimes I feel that I’m a character in a Terry Pratchett novel trying to explain the madness.

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