Finance, users need clear and understandable information

In banking, information must be increasingly basic and comprehensible. Information and contractual documents provided by banking and financial intermediaries can sometimes be formally correct, but ineffective because they are too long or too technical. In the case of complex products, synthetic cost indicators, modulated on individual products, may lose their incisiveness for the purpose of comparing the overall cost. These are some of the observations contained in the 'Survey on the relations between citizens, private enterprises and the public administration with reference to the simplification and transparency of public contracts and contractual clauses for access to services', edited by Banca d'Italia. The Via Nazionale research was acquired by the bicameral parliamentary commission for simplification and then published on the Banca d'Italia website on 26 May.

According to the report, intermediaries are in some circumstances more concerned with mitigating legal risks arising from information gaps or misalignments with respect to the minimum requirements than with promoting an effective understanding of the documents. The digitisation of distribution channels and financial services does not benefit transparency, which has traditionally been built on paper documents and intended for an undifferentiated offer. In the digital world, on the other hand, customer interaction develops along fragmented, dynamic and potentially highly personalised paths. Information overload, interface design and speed of interaction can indeed reduce the weight of pre-contractual documentation.

The Bank of Italy's vigilance, together with the complaints, confirms how compliance with transparency obligations does not always translate into a real understanding of the costs and risks of the products offered. In particular, the enquiry turns a spotlight on unauthorised payment transactions and unilateral changes to contractual conditions. With regard to the first case, for example, it happens that users have difficulty in identifying the information that is essential for the protection of their rights: who to contact, how to proceed, what documentation to present are just some examples. Moreover, the use of complex legal concepts - such as fraud, wilful misconduct or gross negligence - is difficult for the average informed or educated user to understand. With this in mind, some operators have intervened by adding supporting information tools to the contractual documentation that illustrate the steps for submitting the disallowance, the cases in which reimbursement is due and those in which it can be excluded.

Among possible solutions to the problem, Bankitalia points to a package of interventions, including the introduction of targeted warnings. These are prominently placed warnings drawing attention to the risks or salient features of a product. Secondly, the use ofnudging techniques and choice architecture regulation is suggested. Since consumers tend to maintain their initial settings, if the default option is constructed in such a way as to favour the most favourable solution, the effects may be positive. A third area of intervention may concern the way information is presented and organised. In fact, some standardised cost indicators are being investigated in order to improve their representation. At the European level, regulators such as the European Banking Authority are increasingly publishing information sheets that explain, in simple words, the most complex products. Supervisory techniques have also evolved to assess not only the conformity of documents but also the interfaces and the way in which information is presented. The Bank of Italia, for example, has launched mystery surfing exercises, i.e. surveys of intermediaries' websites conducted as potential customers to verify that digital channels ensure compliance with the principles of fairness and transparency.

Simplification, however, is not enough: greater financial literacy is needed, so that citizens have adequate skills to consciously access financial products and services. Since raising financial literacy requires a time horizon that is not short term, and since users find it difficult to use information, protection policies are evolving. There has therefore been a broadening of the scope ofregulation and supervision, so that customer care is effectively embedded in every phase of the relationship. Banca d'Italia has also worked to make it easier to submit complaints and appeals to the Banking and Financial Arbitrator (Abf). "Further interventions," the Survey concludes, "are desirable in all three areas: regulatory production, financial education and protective supervisory activities," also with the help of artificial intelligence.