How to explain financial products in plain language customers trust

Financial firms write for regulators and lawyers, and their customers pay the price. In the European Commission’s 2023 survey of financial literacy, only 45% of adults in the EU answered a question on compound interest correctly, just 20% understood the link between interest rates and bond prices, and only 18% had a high overall score; in Cyprus’s small national sample, the share was 15%[1]. The OECD’s 2023 survey data for Cyprus is starker: 55.6% of adults held a credit product, such as a loan, a card or an overdraft, without understanding simple and compound interest[2].

Trust follows understanding. Asked whether the investment advice they receive from their bank, insurer or adviser is primarily in their best interest, fewer than four in ten EU adults said they were confident, and in Cyprus about one in five did, the lowest share in the EU[1].

This guide is for banks, insurers, lenders, fintechs, brokers and investment firms that want customers to understand what they buy. It sets out what the law now requires and a method for meeting it that customers will notice.

Plain language is a legal duty

For investment and insurance products, the rules already ask for clarity:

• Key information documents. The PRIIPs Regulation requires the key information document for packaged investment and insurance products to be “accurate, fair, clear and not misleading”, no longer than three sides of A4, and written “in language that is clear, succinct and comprehensible”[3].
• Investment firms. MiFID II requires information to be given “in a comprehensible form in such a manner that clients or potential clients are reasonably able to understand the nature and risks” of what is offered[4].
• Insurers. The Insurance Distribution Directive applies the same “fair, clear and not misleading” test to everything an insurance distributor tells customers, marketing included[5].

Credit is next. The new Consumer Credit Directive, which member states must apply from 20 November 2026, requires lenders and credit intermediaries to give “adequate explanations” of a proposed credit agreement, including “the consequences of payment default or late payment”, free of charge and before the agreement is signed. Pre-contractual information must be “clear and comprehensible”, and credit advertising must carry the warning “Caution! Borrowing money costs money” or equivalent wording[6]. Our guide on how to turn a regulatory change into a reason clients trust you covers how to explain a change like this to customers.

More is coming for investments. The Commission’s 2026 mandate to ESMA, the EU’s markets regulator, says disclosures for consumers “need to be easily comprehensible by the target audience and tested with consumers where feasible and relevant”[7]. Under the Retail Investment Strategy, agreed in December 2025 but not yet adopted, marketing would have to give “a balanced presentation of risks and benefits tailored to the intended target audience”[7]. ESMA summed up what it heard from the market in March 2026: “Disclosures: too long, too complex, not digital-first”[8].

Clear is not the same as understood

A document can pass every test of form and still fail the customer. In a study for the Commission, only 54% of mystery shoppers were given a key information document, or pointed to one online, at their first contact with an adviser, and the documents’ layout was “frequently very dense and therefore not reader-friendly”. “Clarity however is not equivalent to usefulness for comparison or comprehension purposes,” the authors warned. For structured notes and portfolio management services, fewer people in the study’s experiment chose the best product than would have done by choosing at random[9].

Most customers do not read the small print at all. The UK’s Financial Conduct Authority noted research finding that “almost no one claimed to read the T&Cs and the few that did were left none the wiser”, and that some firms put the problem down to a “tick-box” approach to communication[10].

The method, in eight steps

1. Start from the decision the customer has to make

Do not start from the product sheet. Start from what the customer has to decide, and the questions they need answered to decide it: what is this, what will it cost me, what can go wrong, and how do I get out? CySEC’s advice to investors is to “insist your investment advisor thoroughly explains the exact cost of any proposed investment” and to “never invest in anything you do not understand”[11]. Answer those questions first, in that order.

2. Write for the reader you actually have

The International Plain Language Federation, whose definition ISO’s plain language standard builds on, describes a communication as plain if “its wording, structure, and design are so clear that the intended readers can easily find what they need, understand what they find, and use that information”[12]. The intended reader of a loan offer is the customer who could not answer the compound interest question.

Keep sentences short and explain every technical term the first time it appears. The Commission’s own drafting guide suggests sentences of “20 words on average” and says that if jargon is unavoidable in documents for the general public, you should “explain them when you first use them or add a glossary”[13]. The FCA’s Consumer Duty, a UK rule but a well-developed model for any firm, asks firms to “use plain and intelligible language”, to make key information prominent and to “avoid unnecessary disclaimers”[14]. In Cyprus, writing for your reader usually means writing in Greek as well as English, and writing the Greek for the customer rather than translating the contract.

3. Show the cost in euros, with a worked example

Customers who cannot calculate compound interest can still read a figure in euros, so do the arithmetic for them. Show the monthly payment, the total cost over the life of the product, what changes if the interest rate rises, and what happens if a payment is missed.

Social Shield Cyprus, a Greek-language public-interest platform whose partnerships Unita Media manages, builds its tools this way. Its loan calculator shows the monthly instalment and, in our translation, “how much interest you will pay in total and how much the instalment changes if the rate rises or falls”, and states what it leaves out: arrangement fees, insurance and other charges[15]. Its payslip guide explains a payslip “line by line” with a worked example[16].

Explain mandatory figures too, not only your own. Every EU broker of contracts for difference has to show the share of its retail accounts that lose money. Trading Business Review, a Unita Media title, explained what that figure means and what it does not: “It counts accounts, not money”[17]. A standard risk warning makes more sense to customers once someone has explained what it measures.

4. Put the key facts first, and layer the rest

Give every product a one-page summary that answers the questions from step 1, and put the full terms behind it. The FCA has found that “layering can be an effective way to structure information flows without overwhelming the consumer”, and highlights smaller firms that use “clear, easy-to-read summary sheets to sit on top of lengthy terms and conditions” when they cannot change the legal wording[18]. ESMA has said consumer testing “will be used to inform and validate improvements to disclosures and digital investor journeys”[8].

Layering must never hide the bad news. The cost, the main risks and the way out belong on the first layer, with the same prominence as the benefits.

5. Test it with real customers

Do not take the absence of complaints as proof. In its 2026 review, the FCA found “weak evidence of testing”, and said firms relying on “sales data or the absence of complaints as evidence of understanding” did not have reliable assurance. Testing need not be costly: one smaller firm in the review chose its two highest-impact communications and “ran simple tests fortnightly with 3-5 customers”, while another set itself a target of “at least 80% correct recall of key points”[18].

A simple version works for any firm: give five customers the page, ask them what it will cost, what they could lose and how they would get out, and rewrite whatever they get wrong.

6. Make every page and every screen say the same thing

Customers meet your product in an advert, on your website, in a document and in a conversation. If the cost or the risk reads differently in each place, they stop trusting all of them. Agree one version of the key facts and use it everywhere, from the product page to the contract summary. Our guide on how to build a website that earns trust at first glance covers the product pages.

7. Prepare the people who explain it

The new credit rules’ “adequate explanations” will often be given by people, at a branch, on the phone or on a video call. The FCA’s rules for one-to-one conversations ask staff to “ask the retail customer whether they understand the information and if they have any further questions”[14]. Train staff to explain the key facts in the same plain words the documents use, and to check understanding before the customer signs. For video, our guide on how to write a video script people watch to the end covers structure and pacing.

8. Support financial education that sells nothing

Customers who understand money understand your products. The Consumer Credit Directive asks member states to “promote measures that support the education of consumers in relation to responsible borrowing and debt management”[6]. Cyprus approved a national strategy for financial literacy on 28 June 2022, overseen by a committee chaired by the Governor of the Central Bank of Cyprus[19].

Firms can help, on one condition: education must stay education. Keep your products out of it, label your support clearly, and fund material your customers would trust even if your name were not on it. Our guide on how to run a CSR programme that earns trust sets out how to structure a programme.

A checklist for your next customer document

1. List the questions the customer must answer to decide, and answer them first.
2. Write for the customer who cannot calculate compound interest.
3. Keep sentences short and explain every technical term when it first appears.
4. Write the Greek version for the customer, not as a translation of the contract.
5. Show the monthly payment and the total cost in euros.
6. Show what happens if the rate rises or a payment is missed.
7. Put cost, risks and how to get out on the first page, as prominently as the benefits.
8. Layer the full terms behind a one-page summary.
9. Test with five customers and fix whatever they get wrong.
10. Use the same key facts in adverts, web pages, documents and conversations.
11. Train staff to explain in the same words and to check understanding before signing.
12. Support independent education, clearly labelled, with your products kept out.