Dr. Deborah S. Bosley Associate Professor of English UNC Charlotte [email_address] Permission needed to use any material i...
What’s the problem in the U.S.? <ul><ul><li>student loans </li></ul></ul><ul><ul><li>cell phone bills </li></ul></ul><ul><...
What should the government do? <ul><ul><li>3  Paola Sapienza and Luigi Zingales .   July 20, 2010 -- Chicago Booth/Kellogg...
Why so many new laws now? <ul><ul><li>51% of public is angry 1 </li></ul></ul><ul><ul><li>74% do not trust financial insti...
What’s new? <ul><ul><li>CCARD </li></ul></ul><ul><ul><ul><li>22 May 2009  |  22 Feb. 2010 </li></ul></ul></ul><ul><ul><li>...
Credit Card Accountability, Responsibility and Disclosure Act (CCARD) <ul><ul><li>&quot;With this new law, consumers will ...
Give real information about  financial consequences <ul><ul><li>Disclose terms  </li></ul></ul><ul><ul><li>in language con...
 
 
 
The Dodd-Frank Financial Reform  <ul><li>Legislation  </li></ul><ul><li>Promotes financial stability by  improving account...
Mortgage disclosures <ul><li>90% could not identify correct  </li></ul><ul><li>amount of up-front fees </li></ul><ul><li>6...
Consumer Financial Protection Agency <ul><ul><li>“ This agency will have the power to make  </li></ul></ul><ul><ul><li>cer...
Consumer Financial Protection Agency <ul><li>Address all forms of  </li></ul><ul><li>credit | deposit </li></ul><ul><li>pr...
SEC: Form ADV, Part 2: The “brochure” <ul><li>New requirements </li></ul><ul><li>Use narratives  |  Improve format  |  Exp...
 
 
Where’s the Accountability? Between the thought and  the action there falls a shadow. T.S. Eliot
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New US Laws and Regulations Requiring Plain Language

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  • The world rests on the back of the turtles. Asked, what do turtles rest on. Answer: “ turtles all the way down” That’s how it feels today. Plain language is now everywhere and gaining international momentum.
  • In December 2008, 60 percent of survey respondents said they were angry about the current economic situation. In the latest wave of data this figure has dropped to 51 percent.
  • In December 2008, 60 percent of survey respondents said they were angry about the current economic situation. In the latest wave of data this figure has dropped to 51 percent.
  • Interest rates: 45 days notice; can’t raise rates unless 60 days overdue Fees: no fees for exceeding limit unless customer agrees Payments: must pay off highest interest rate first; 21 days before payments are due Student cards: Parents must sign if under 21 Gift cards: no fees for 1 year; expire after 5 years
  • Credit card contract terms disclosed in language consumers can see and understand Creditors will give consumers clear disclosures of account terms before consumers open an account, and clear statements of the activity on consumers’ accounts afterwards.  disclosures will help consumers make informed choices about using the right financial products and managing their own financial needs.  Real Information about the Financial Consequences of Decisions: Issuers will be required to show the consequences to consumers of their credit decisions. Issuers will need to display on periodic statements how long it would take to pay off the existing balance – and the total interest cost – if the consumer paid only the minimum due. Issuers will also have to display the payment amount and total interest cost to pay off the existing balance in 36 months. http://www.creditcards.com/credit-card-news/new-look-credit-card-statement-1273.php
  • Elizabeth Warren and Treasury Secretary Timothy Geithner on Tuesday brought together consumer groups, mortgage-industry officials and other housing representatives for talks on the Obama administration&apos;s plan to simplify mortgage-disclosure documents.
  • To look out for the financial interests of ordinary Americans.
  • Apply to “consumer financial products or services.” To look out for the financial interests of ordinary Americans.
  • Current: Check boxes, fill in Narratives: compensation practices disclosures of performance-based fees investment strategies risk of loss disciplinary information code of ethics brokerage practices Improve format Expand content to include details most relevant to clients of investment advisers Require brochure “supplements” to be delivered to new and prospective clients to give resume-like information about the individuals at an investment advisory firm who will provide services to the clients. Ensure investors have easy access to the brochures as investment advisers are required to file them electronically for posting on the SEC’s website. Sometimes regulatory changes that are meant to benefit investors end up taxing industry professionals. That does not appear to be the case with the Securities and Exchange Commission’ s (SEC’s) new requirements for Form ADV, Part 2 . 
  • In drafting your brochure and brochure supplements, you should: (i) use short sentences; (ii) use definite, concrete, everyday words; (iii) use active voice; (iv) use tables or bullet lists for complex material, whenever possible; (v) avoid legal jargon or highly technical business terms unless you explain them or you believe that your clients will understand them; and (vi) avoid multiple negatives. Consider providing examples to illustrate a description of your practices or policies. The brochure should discuss only conflicts the adviser has or is reasonably likely to have, and practices in which it engages or is reasonably likely to engage. If a conflict arises or the adviser decides to engage in a practice that it has not disclosed, supplemental disclosure must be provided to clients to obtain their consent. If you have a conflict or engage in a practice with respect to some (but not all) types or classes of clients, advice, or transactions, indicate as such rather than disclosing that you “may” have the conflict or engage in the practice. Write your brochure and supplements in plain English, taking into consideration your clients’ level of financial sophistication. Your brochure should be concise and direct. Write your brochure and supplements in plain English, taking into consideration your clients’ level of financial sophistication. Your brochure should be concise and direct. In drafting your brochure and brochure supplements, you should: (i) use short sentences; (ii) use definite, concrete, everyday words; (iii) use active voice; (iv) use tables or bullet lists for complex material, whenever possible; (v) avoid legal jargon or highly technical business terms unless you explain them or you believe that your clients will understand them; and (vi) avoid multiple negatives. Consider providing examples to illustrate a description of your practices or policies. The brochure should discuss only conflicts the adviser has or is reasonably likely to have, and practices in which it engages or is reasonably likely to engage. If a conflict arises or the adviser decides to engage in a practice that it has not disclosed, supplemental disclosure must be provided to clients to obtain their consent. If you have a conflict or engage in a practice with respect to some (but not all) types or classes of clients, advice, or transactions, indicate as such rather than disclosing that you “may” have the conflict or engage in the practice.
  • In drafting your brochure and brochure supplements, you should: (i) use short sentences; (ii) use definite, concrete, everyday words; (iii) use active voice; (iv) use tables or bullet lists for complex material, whenever possible; (v) avoid legal jargon or highly technical business terms unless you explain them or you believe that your clients will understand them; and (vi) avoid multiple negatives. Consider providing examples to illustrate a description of your practices or policies. The brochure should discuss only conflicts the adviser has or is reasonably likely to have, and practices in which it engages or is reasonably likely to engage. If a conflict arises or the adviser decides to engage in a practice that it has not disclosed, supplemental disclosure must be provided to clients to obtain their consent. If you have a conflict or engage in a practice with respect to some (but not all) types or classes of clients, advice, or transactions, indicate as such rather than disclosing that you “may” have the conflict or engage in the practice. Write your brochure and supplements in plain English, taking into consideration your clients’ level of financial sophistication. Your brochure should be concise and direct. Write your brochure and supplements in plain English, taking into consideration your clients’ level of financial sophistication. Your brochure should be concise and direct. In drafting your brochure and brochure supplements, you should: (i) use short sentences; (ii) use definite, concrete, everyday words; (iii) use active voice; (iv) use tables or bullet lists for complex material, whenever possible; (v) avoid legal jargon or highly technical business terms unless you explain them or you believe that your clients will understand them; and (vi) avoid multiple negatives. Consider providing examples to illustrate a description of your practices or policies. The brochure should discuss only conflicts the adviser has or is reasonably likely to have, and practices in which it engages or is reasonably likely to engage. If a conflict arises or the adviser decides to engage in a practice that it has not disclosed, supplemental disclosure must be provided to clients to obtain their consent. If you have a conflict or engage in a practice with respect to some (but not all) types or classes of clients, advice, or transactions, indicate as such rather than disclosing that you “may” have the conflict or engage in the practice.
  • New US Laws and Regulations Requiring Plain Language

    1. 1. Dr. Deborah S. Bosley Associate Professor of English UNC Charlotte [email_address] Permission needed to use any material in this presentation New U.S. Laws | Regulations: Plain Language All the Way Down
    2. 2. What’s the problem in the U.S.? <ul><ul><li>student loans </li></ul></ul><ul><ul><li>cell phone bills </li></ul></ul><ul><ul><li>financial statements </li></ul></ul><ul><ul><li>insurance policies </li></ul></ul><ul><ul><li>internet | software agreements </li></ul></ul><ul><ul><li>mortgage contracts </li></ul></ul><ul><ul><li>credit card statements </li></ul></ul><ul><ul><li>explanation of benefits </li></ul></ul><ul><ul><li>discharge hospital papers </li></ul></ul><ul><ul><li>confusion | costly mistakes | inability to comply </li></ul></ul>
    3. 3. What should the government do? <ul><ul><li>3 Paola Sapienza and Luigi Zingales . July 20, 2010 -- Chicago Booth/Kellogg School Financial Trust Index in 2008. </li></ul></ul>
    4. 4. Why so many new laws now? <ul><ul><li>51% of public is angry 1 </li></ul></ul><ul><ul><li>74% do not trust financial institutions 2 </li></ul></ul><ul><ul><li>intense federal scrutiny </li></ul></ul><ul><ul><li>emphasis on transparency </li></ul></ul><ul><ul><li>consumer skepticism </li></ul></ul><ul><ul><li>“ In plain language and in plain sight.” </li></ul></ul><ul><ul><li>1,2 Paola Sapienza and Luigi Zingales . July 20, 2010 -- Chicago Booth/Kellogg School Financial Trust Index in 2008. </li></ul></ul>
    5. 5. What’s new? <ul><ul><li>CCARD </li></ul></ul><ul><ul><ul><li>22 May 2009 | 22 Feb. 2010 </li></ul></ul></ul><ul><ul><li>Dodd–Frank Wall Street </li></ul></ul><ul><ul><li>Reform – Consumer Protection Act </li></ul></ul><ul><ul><li>21 July 2010 | 21 January 2011 </li></ul></ul><ul><ul><li>Consumer Financial Protection Agency </li></ul></ul><ul><ul><li>SEC Form ADV, Part 2 </li></ul></ul><ul><ul><li>26 July 2010 | 31 December 2010 </li></ul></ul>
    6. 6. Credit Card Accountability, Responsibility and Disclosure Act (CCARD) <ul><ul><li>&quot;With this new law, consumers will have </li></ul></ul><ul><ul><li>the strong and reliable protections they </li></ul></ul><ul><ul><li>deserve.  We will continue to press for </li></ul></ul><ul><ul><li>reform that is built on transparency, </li></ul></ul><ul><ul><li>accountability, and mutual </li></ul></ul><ul><ul><li>responsibility – values fundamental to </li></ul></ul><ul><ul><li>the new foundation we seek to build for </li></ul></ul><ul><ul><li>our economy…” President Obama </li></ul></ul>
    7. 7. Give real information about financial consequences <ul><ul><li>Disclose terms </li></ul></ul><ul><ul><li>in language consumers can see </li></ul></ul><ul><ul><li>| understand </li></ul></ul><ul><ul><li>Give clear account terms </li></ul></ul><ul><ul><li>before | after opening accounts </li></ul></ul><ul><ul><li>Show consequences of decisions </li></ul></ul><ul><ul><li>Display payment amount </li></ul></ul><ul><ul><li>total interest cost for 36 month payoff </li></ul></ul><ul><ul><li>http://www.creditcards.com/credit-card-news/new-look-credit-card-statement-1273.php </li></ul></ul>
    8. 11. The Dodd-Frank Financial Reform <ul><li>Legislation </li></ul><ul><li>Promotes financial stability by improving accountability | transparency </li></ul><ul><ul><li>Ends bailouts and abusive </li></ul></ul><ul><ul><li>financial services practices </li></ul></ul><ul><ul><li>Establishes Consumer Financial Protection Agency </li></ul></ul><ul><li>Effect </li></ul><ul><li>Mortgages | Insurance | Disclosures </li></ul>
    9. 12. Mortgage disclosures <ul><li>90% could not identify correct </li></ul><ul><li>amount of up-front fees </li></ul><ul><li>65% did not spot substantial </li></ul><ul><li>penalty if refinanced within the </li></ul><ul><li>first two years </li></ul><ul><li>25% could not identify settlement </li></ul><ul><li>costs 6 </li></ul><ul><li>89% support requiring banks to </li></ul><ul><li>disclose all mortgage fees upfront, </li></ul><ul><li>clearly, and conspicuously 7 </li></ul>6   Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms : A Bureau of Economics Staff Report (June 2007, FTC) 7 Caravan Opinion Research Corporation, Consumer Federation of America
    10. 13. Consumer Financial Protection Agency <ul><ul><li>“ This agency will have the power to make </li></ul></ul><ul><ul><li>certain that consumers get information </li></ul></ul><ul><ul><li>that is clear and concise – in plain </li></ul></ul><ul><ul><li>language – so they can compare products </li></ul></ul><ul><ul><li>and know exactly what they’re getting </li></ul></ul><ul><ul><li>into…ensure that banks and other firms </li></ul></ul><ul><ul><li>cannot hide behind those ridiculously </li></ul></ul><ul><ul><li>confusing contracts – pages of fine print </li></ul></ul><ul><ul><li>that no one can figure out.” President Obama </li></ul></ul>
    11. 14. Consumer Financial Protection Agency <ul><li>Address all forms of </li></ul><ul><li>credit | deposit </li></ul><ul><li>prepaid debit cards </li></ul><ul><li>loan | debt services </li></ul><ul><li>debt services </li></ul><ul><li>mortgage disclosures </li></ul><ul><li>Require all disclosures be </li></ul><ul><ul><li>clear | simple | concise </li></ul></ul><ul><li>Test disclosures regularly </li></ul><ul><li>http://www.creditcards.com/credit-card-news/consumer-financial-protection-agency-house-vote-1282.php </li></ul>
    12. 15. SEC: Form ADV, Part 2: The “brochure” <ul><li>New requirements </li></ul><ul><li>Use narratives | Improve format | Expand content </li></ul><ul><li>Ensure easy access | Use plain English </li></ul>“ In its current form … the format frequently does not correspond well to an adviser’s business…In some cases, the required disclosure may not describe the adviser’s business or conflicts in a way that is truly accessible to the investor.” SEC Chairman Mary L.Schapiro
    13. 18. Where’s the Accountability? Between the thought and the action there falls a shadow. T.S. Eliot

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