The financial services industry is a complex industry with terminology, acronyms and legislative terms that the “man on the street” does not easily understand. People working in the industry can quickly get caught up in the jargon and often assume that clients will understand. As a result plain language is highlighted as one of the main points in the ‘Treating Customers Fairly’ (TCF) legislation.
There are however many other pieces of legislation in South Africa that require the use of plain legal language. In a recent blogpost, Michalsons, a corporate law firm, shares examples of legislation where plain language is required.
|1.||Consumer Protection Act: under section 22 there is a “right to information in plain and understandable language“.|
|2.||National Credit Act 34 of 2005: section 64 makes provision for the “Right to information in plain and understandable language”.|
|3.||Long-Term Insurance Act 52 of 1998 and Short-Term Insurance Act 53 of 1998: The Rules and Regulations make provision for representations and information to a policyholder in “plain language, avoid[ing] uncertainty or confusion and not be[ing] misleading”.
|4.||Companies Act 71 of 2008: Section 6(4)(b) provides that “the producer of a prospectus, notice, disclosure or document” must publish it “in plain language, if no form has been prescribed for that prospectus, notice, disclosure or document”. Under section 6(6) the Commission may publish guidelines for methods of assessing whether it satisfies the plain language requirement.|
|5.||Financial Advisory and Intermediary Service Act 37 of 2002: in terms of section 12 of the Rules and Regulations to the Act a broker must give medical scheme advice to a consumer in “plain, simple and understandable language”.
|6.||Code of Banking Practice: in terms of clause 2 of the Code members of the Banking Association must undertake to give information on products and services “in plain language and ensure that all written terms and conditions are fair and clearly set out [the Consumer’s] rights and responsibilities in plain language“.|
|7.||Electronic Communications Act 36 of 2005: the Code of Conduct prescribes that licensees must use “plain and understandable language” in their service contracts.|
|8.||Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002: the Rules and Regulations make provision for information to be provided in a “readable, intelligible and understandable format”.|
The importance of relaying material terms and conditions in a clear and unequivocal manner has been highlighted in numerous findings by the various ombuds. It is in your own interest to do so, and also ensure that you provide such information to the client in written format as proof that you did so. Relying on the policy wording alone has been the undoing of many a defence from advisers.