To bold or not to bold?

Following the implementation of the FCA’s Consumer Duty, one of the golden rules to evidencing consumer understanding seemed clear. Jargon – technical words in any field – reduces understanding.

Providers should minimise the use of these words when communicating with customers wherever possible. But if they can’t be removed, providers must ensure they include a plain language explanation for each term.

In lengthy customer-facing documents such as terms and conditions (Ts&Cs) and policy booklets, providers often opt for the ‘bold and explain’ approach. Key terms are defined in a glossary and then highlighted in bold throughout the document.

On paper, you could say this clarifies the jargon. But in practice, relying on glossaries can create a different problem.

Take this example…

Let’s say you’re checking the Ts&Cs for your travel insurance. You want to make a claim for losing some cash while you were on holiday. Your travel policy is 68 pages long, and it has a 3-page glossary at the back. You go straight to the ‘personal money’ section – but discover that it doesn’t explain whether cash is covered. As the term ‘personal money’ is in bold, you figure this must be explained in the glossary. You turn to the back of the policy to find the following definition:

Personal Money

Credit, debit or charge cards, cheques, travellers cheques, Cash, bonds, money orders, negotiable instruments, pre-paid phone cards or other securities belonging to You.

You notice the term ‘cash’ is also in bold. So you search for this definition too, only to find that it means exactly what most customers would expect - coins and bank notes.

Now that you’ve finally understood the definition of ‘cash’ within the context of your policy, you turn back to the ‘personal money’ section to see how much you can claim back.

The problem this creates

You weren’t intending to read the Ts&Cs line by line – you just wanted to check whether you can make a claim for the cash you lost. But due to the way “cash” was explained in your policy, you had to locate and read part of three different sections in the Ts&Cs. You were also sent on a loop, as a defined term (‘cash’) was used within the explanation of another defined term (‘personal money’).

As a result, it’s taken you longer to understand the conditions for claiming cash on your policy.

At Fairer Finance, we call this deferred understanding - when the information customers need is present in the document, but not in the place they need it.

For some customers, this creates frustration. But, frankly, many people will give up reading before reaching the end of this journey.

How can providers ensure customers get information when they need it?

1. Explain key terms at the point of use. Terms such as ‘money’ in the context of travel insurance are unlikely to be used throughout the document. Including a plain language explanation in the relevant section would save customers having to flip between pages to understand a certain clause.

2. Only define specialist terms. By relying on a glossary, it’s easy to fall into the trap of explaining terms that have a common-sense explanation, such as ‘cash’ in the example above. Most customers don’t need a formal definition of coins and bank notes. By contrast, terms such as ‘excess’, ‘home’, or ‘portfolio’ may have specific meanings within the context of a product – and therefore warrant explanation.

What if a specialist term is used throughout the document?

I know what you’re thinking. It’s not possible to explain every specialist term at the point of use, especially if it’s used so frequently throughout a document. For example, the explanation of ‘we, us and our’ and ‘you and your’, which are important terms in the context of a Ts&Cs document. We’d recommend defining terms like these at the top of a Ts&Cs in a ‘Welcome’ style section. The key is to keep this to a handful of terms, so the ‘Welcome’ section doesn’t turn into a lengthy glossary.

Should defined terms be in bold?

The use of bold text for defined terms has become commonplace across financial services.

Consumer testing suggests that some customers find bold text helpful because it signals that a term has a specific meaning within the document. However, the benefits diminish when large numbers of words are bolded throughout a document. Customers can quickly become desensitised to the formatting, reducing its effectiveness. Some also report that excessive bold text feels distracting, particularly when common words such as ‘we’ or ‘you’ appear in bold on almost every page.

As with any visual design tool, bold text works best when used selectively. It’s also not the only way to highlight a key term – providers that demonstrate best practice use colour or callout boxes to distinguish definitions from the main body of text.

The key takeaways

Most customers will never read the glossary. The more we force customers to search elsewhere for a definition, the more we delay understanding.

The best solution is not to create a better glossary – it's to minimise the need for one altogether.

Where plain English can be used, it should be. Where specialist terms are necessary, explain them where customers are most likely to encounter them. And where terms are used across the whole document, define them once upfront in a short introductory section.