Dr. Deborah S. BosleyAssociate Professor of English

UNC Charlottedsbosley@uncc.edu

Permission needed to use any material in this presentation

New U.S. Laws | Regulations: Plain Language All the Way Down

student loanscell phone billsfinancial statementsinsurance policiesinternet | software agreementsmortgage contractscredit card statementsexplanation of benefitsdischarge hospital papers

confusion | costly mistakes | inability to comply

What’s the problem in the U.S.?

What should the government do?

3 Paola Sapienza and Luigi Zingales. July 20, 2010 -- Chicago Booth/Kellogg School Financial Trust Index in 2008.

51% of public is angry1

74% do not trust financial institutions2

intense federal scrutiny

emphasis on transparency

consumer skepticism

“In plain language and in plain sight.”

1,2 Paola Sapienza and Luigi Zingales. July 20, 2010 -- Chicago Booth/Kellogg School Financial Trust Index in 2008.

Why so many new laws now?

CCARD22 May 2009 | 22 Feb. 2010

Dodd–Frank Wall Street

Reform – Consumer Protection Act 21 July 2010 | 21 January 2011

Consumer Financial Protection Agency

SEC Form ADV, Part 226 July 2010 | 31 December 2010

What’s new?

"With this new law, consumers will have

the strong and reliable protections they

deserve. We will continue to press for

reform that is built on transparency,

accountability, and mutual

responsibility – values fundamental to

the new foundation we seek to build for

our economy…” President Obama

Credit Card Accountability, Responsibility and Disclosure Act (CCARD)

Disclose terms

in language consumers can see

| understand

Give clear account terms

before | after opening accounts

Show consequences of decisions

Display payment amount

total interest cost for 36 month payoff

http://www.creditcards.com/credit-card-news/new-look-credit-card-statement-1273.php

Give real information about financial consequences

Legislation

Promotes financial stability by improving accountability | transparency

Ends bailouts and abusive

financial services practices

Establishes Consumer Financial Protection Agency

Effect

Mortgages | Insurance | Disclosures

The Dodd-Frank Financial Reform

90% could not identify correct amount of up-front fees65% did not spot substantial penalty if refinanced within the first two years 25% could not identify settlement costs6

89% support requiring banks to disclose all mortgage fees upfront, clearly, and conspicuously7

Mortgage disclosures

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

“This agency will have the power to make

certain that consumers get information

that is clear and concise – in plain

language – so they can compare products

and know exactly what they’re getting

into…ensure that banks and other firms

cannot hide behind those ridiculously

confusing contracts – pages of fine print

that no one can figure out.” President Obama

Consumer Financial Protection Agency

Address all forms of credit | depositprepaid debit cards loan | debt servicesdebt servicesmortgage disclosures

Require all disclosures beclear | simple | concise

Test disclosures regularly

http://www.creditcards.com/credit-card-news/consumer-financial-protection-agency-house-vote-1282.php

Consumer Financial Protection Agency

SEC: Form ADV, Part 2: The “brochure”

New requirements

Use narratives | Improve format | Expand content

Ensure easy access | Use plain English

“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

Where’s the Accountability?

Between the thought and

the action there falls a shadow.

T.S. Eliot