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.”