Not understanding PCP deals is just the beginning

A report carried in the Irish media today shows that Irish consumers don’t really understand PCP contracts. That is just the beginning!

Irish consumers also don’t understand:

  • Mortgages
  • Cost of credit
  • Investing
  • Pensions
  • Personal credit reports
  • The list goes on and on!

When it comes to money in general, Irish consumers score poorly across a broad range of measures when compared to many other European countries; PCP contracts are just the tip of the iceberg!

Irish consumers are particularly bad at asking questions in respect to money. For example, on areas of retirement planning, most fail to challenge investment advisers when it comes to the use of language, investment options, rates of return as well as  fees and charges. Separately, on everyday purchases using credit cards, many do not understand the enormous cost of using the minimum payment which can double the cost of purchases.

Financial confusion

Broadly, the core issue comes down to financial confidence; Irish consumers simply lack it in buckets. And who could blame them? At a recent pensions and investment seminar, the language used by the speakers was foreign, cryptic and confusing. Financial terminology that should be confined to the back-room of product development was used as a form of assault-and-disarm tactic:  PRSA, AVC, ARF, AMRF, BOB, the list went on and on. By the end of the 45-minute talk, the bobbing heads of the audience was more an expression of terminology numbness, not understanding and agreement.

Starting early

Financial education is key to preparing all citizens for a life with money. At its core must be language that is simple. For example, instead of using cryptic terminology to explain say pensions, a more engaging alternative would be to begin by explaining them as long-term savings and building on the complexity of choices available. This is how I approach the topic and it always works.

Financial confidence

Financial education also offers an opportunity to develop financial confidence, that is the willingness of people to challenge those that may deliberately or otherwise be inclined to over-rely on cryptic financial terminology…and this is the key to greater consumer understanding of setting and achieving their own financial goals and managing their money more effectively.

Frank Conway is a Qualified Financial Adviser and founder of, the financial education group. 

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