By Lisa

Hidden clauses and murky fine print used to be the norm. Today they come at a cost. As regulators enforce stricter standards and savvy consumers demand greater transparency, companies that adopt straightforward and honest language may be outpacing those that do not.

Clarity in promotional terms is reshaping consumer expectations

Nowhere is this more evident than in the design of promotional offers. Traditionally, incentives were often accompanied by layered conditions that could be difficult to understand, creating confusion and, in some cases, mistrust. In response, many platforms are beginning to simplify these structures. Formats such as how clearer terms can improve user understanding by removing additional requirements and presenting conditions in a more accessible way. This week's Gambling Commission ruling on wagering requirements being limited to no more than 10 times the stake amount that is being gambled is a direct result of this. As noted via iGB are forcing companies to compete on actual value as opposed to obscure fine print. This rules-based approach for greater transparency can set an example that ripples out across other sectors.

Regulation is raising the bar across industries

The Consumer Rights Act 2015 made it unlawful to enter into a contract where there are unfair or misleading terms, requiring terms to be clear and understandable. In addition, in April 2022 the Competition and Markets Authority updated its unfair contract terms guidance with considerable detail on wording that it regards as obscure, and the FCA has incorporated the Consumer Duty regulatory framework, including its consumer outcomes standard, in a financial services sector with a long tradition of clear communications with customers. Recent enforcement activity therefore makes enforcement a very real risk to those who prefer to use convoluted language and obscurantism.

See also: Prepaid Cards: Which Solutions Actually Work Best

Many European markets face the same challenges. In Europe, a new EU directive on unfair commercial practices may oblige companies to provide clear and transparent terms and conditions which must be applicable across all EU Member States, leaving no scope for companies with a global business to justify different terms and conditions in different markets.

Trust is emerging as a measurable commercial asset

A Harvard Business Review article on the elements of consumer value highlights trust as ranking unexpectedly high among its findings. Achieving transparency as a competitive differentiator is not as abstract as it sounds. Customers who have visibility into what they are buying into are far more likely to remain customers, become advocates, and complain less. Improved customer support efficiencies, reduced chargebacks, and protection of brand integrity are all additional benefits.

Companies that view plain language as a product feature rather than as a regulatory requirement are basically turning compliance into a competitive advantage.

A strategic shift, not just a legal one

Every time analysts look in any direction – regulation, customer behaviour or market research – the findings often seem to be heading in the same general direction. And paying businesses to be more transparent and to explain in more detail what they offer is likely to be a win win – a win for the business concerned (though the gain will probably be under-stated, at least initially) and a win for everyone else too, because increased transparency is likely to strengthen a business's credibility – and credibility is a highly armour-plated kind of benefit.

Suggested reading: