Small print is ignored and needs a rethink, says Government study

Consumers do make buying decisions that they are happy with, according to the researchers, but they are not necessarily making informed decisions – meaning it is unlikely that that regulated information is having a major impact on their behaviour.

For required information to have more impact, a new approach is called for. One recommendation in the joint report published on Wednesday by the Better Regulation Executive and National Consumer Council is that information should be tested on consumers before being applied to goods and services.

The information required on consumer credit agreements should also be reviewed, it said.

The report gave the example of a store card agreement that took more than an hour to read. Such agreements were felt by consumers "to be full of dense, inaccessible small print, and were considered to be there to protect the company rather than the consumer, written in jargon and legalese," according to the researchers.

Consumers ignore the detail, especially when making spontaneous decisions, for example, when being offered a store card at point of sale. Low literacy groups said the small print was scary and humiliating. Other groups were blasé about ignoring the contract detail, describing it as unimportant and boring. When prompted for their reaction to wording such as "The Consumer Credit Act 1974" people "glazed over", according to the researchers. A representative response: "What the hell is the Consumer Credit Act 1974 anyway?"

Such agreements should be shorter and rewritten in layman's terms to be useful, according to the researchers. Symbols, diagrams and colour can help, they found. They identified one example of good practice in financial services, the Child Trust Fund Decision Tree. The Child Trust Fund was set up by HM Revenue and Customs and helps parents to select a savings and investment account for their children.

Consumers were cynical about other regulatory information. They believed that recycling logos were displayed to serve a marketing purpose as much as anything else. Few consumers recognised the 17 recycling symbols they were shown. Product safety guidelines were perceived to exist to protect the manufacturer against litigation. The study highlighted a toaster that came with 50 safety warnings, including warnings against using the toaster on its side and as a source of heating. And messages to call centre customers that their calls may be recorded were perceived as an implicit warning against verbal abuse.

According to the report, "much regulated information is ineffective because of its format, often complex black and white text, and the way it is framed.

The report also suggests putting greater emphasis on the desired outcome of the information while giving greater freedom to businesses on the way it is provided.

Business Secretary John Hutton said: “We are all familiar with times when the information provided with a product or a contract is so lengthy or confusing we simply disregard it. This information is expensive to provide, costing business over £1.5 billion a year and simply confuses consumers. It is unacceptable that consumers are taking decisions in the dark unaware of the potential dangers or consequences."

"We are acting to give the power back to consumers to make informed choices by rationalising information and making sure it is presented as simply as possible," he said.