how to meet compliance requirements for plain language · 1/4/2016 1 how to meet compliance...

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How to meet Compliance Requirements for Plain Language

Dr. Deborah S. Bosley

The Plain Language Group

[email protected]

704.641.1334

SCCE | January 5, 2015

All material is copyrighted and may be used ONLY with permission.

The Complex World of Compliance

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Authorization Holds for Card transactions

For all Card purchase transactions, please note that the Bank is permitted to place a temporary hold against some or all of the funds in your Access Account if and when an authorization request from a merchant is obtained. The Bank refers to this temporary hold as an “Authorization Hold,” and it will be subtracted from your Available Balance. Your “Available Balance” is the most current record the Bank has about the funds that are available for withdrawal from the Account. It does not reflect all your outstanding checks, bill payments (such as ACH and recurring debit card transactions) that you have authorized, or other transactions that have not been paid from the Account. Also, your Available Balance may not reflect all of your Card transactions. For more information, please refer to the Section of your Business Account Agreement entitled “Determining Your Account’ Available Balance”. In the case of an authorization request at a restaurant, hotel, or similar merchant, this amount may be different from the actual transaction amount because the actual transaction amount may not yet be known to the merchant when it submits the authorization request. For those transactions, there may be no Authorization Hold, or the amount of the Authorization Hold may be different from the transaction amount. In some other cases the Bank may not receive an authorization request from the merchant, and there will be no Authorization Hold. The Bank is permitted to place an Authorization Hold on your Access Account for up to three (3) business days on most transactions (or for up to thirty (30) business days for certain types of debit or ATM card transactions, including but not limited to, car rental transactions, cash transactions, and international transactions), from the time of the authorization or until the transaction is paid from your Access Account. Please note that if the transaction is not submitted for payment by the merchant within the three (3) business days (or thirty (30) business days, as applicable), the Bank will release the Authorization Hold, which will increase the Available Balance until the transaction is submitted for payment by the merchant and finally posted to your Access Account. We urge you to record and track all of your transactions closely to confirm that your available balance accurately reflects your spending of funds from your Access Account.

Here’s the Agenda

1. What are the problems?2. What is plain language?3. How do we know it works?4. What are plain language strategies?5. What laws | regs require

transparency | plain language?6. How can your corporation benefit

from using plain language?

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1. What are the problems?

• cell phone agreements

• insurance policies

• mortgage contracts

• credit card statements

• internet | software agreements

• proxy statements

• internal policies | procedures

• employee benefits

• government regulations

• liability, lack of public trust, costly mistakes

Study of homeowners and investors

• 63% intentional

• 75% financial crisis

• 84% distrust companies

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1. What are the problems?

• corporate trust at all time low

• disclosure ≠ communication

• compliance requires understanding

• legal language can be plain

• intense federal scrutiny

Provision in fee agreement: Before

The client understands that any estimates provided by the Firm of the magnitude of the expenses that will be required at certain stages of any litigation asserting a cause of action are not precise, and that the kinds and amounts of expenses required are ultimately a function of many conditions over which the Firm has little or no control, particularly the extent to which the opposition files pretrial motions and engages in its own discovery requests, whether in the nature of interrogatories, depositions, requests for production, or requests for admission, or any other type of discovery allowed by the rules of procedures in the forum in which the dispute is pending. 110 words; 1 sentence; 48th grade

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Provision in fee agreement: After

A firm’s estimate are just that:

estimates. Conditions outside

the firm’s control, especially the

other side’s pretrial motions and

discovery requests, may raise or

lower expenses. 26 words; 2 sentences; 12th grade

SEC “dings” disclosures

• Bristol‐Myers • Prudential• Coca‐Cola• General Electric• Schering‐Plough• Pfizer• …294 more

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Here’s the new introduction

During 2014, senior executive compensation consisted

of three key components:

1) base salary,

2) short‐term cash incentive compensation, and

3) long‐term equity based incentive compensation.

We also provide

• benefits to senior executive officers, including insurance, retirement plans;

• termination, severance, and change‐in control arrangements; and

• perquisites.

In the sections below, we discuss the following:

• reasons for awarding such compensation,

• considerations in setting the amounts of compensation, and

• amounts we award.

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2. What is plain language?

• Plain language is the use of proven writing and designing strategies that make it easy for the intended audience to understand, find, and use the information.

• Clear | Concise | Credible

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3. How do we know it works?

Clarity

• increases investment dollars

• provides higher corporate reputations

Complexity

• decreases accurate earnings forecasts

• readers’ estimation of author's intelligence declined

Comprehension

• improves understanding of legal documents by 66%.

The Complex World of Compliance Made Simpler

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4. What are plain language strategies?

1. write for intended audience(s)2. understand purpose(s)3. use active voice4. use pronouns5. use positive language 6. be succinct7. avoid jargon: use common words8. Sound human9. write short sentences | paragraphs10. use headings | lists11. include visuals (tables, figures, etc.)12. test document for readability

Six quick tips for plain language

1. sentences = 15‐18 best; 25 words maximum

2. paragraphs = 3‐5 short sentences

3. headings = 3‐5 per page

4. columns easiest to read online

5. write at 8th grade level

6. design as important as language

Six tips for plain language

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• No reader ever complained that compliance information was too easy to understand.

Dumbing down?

Credit Report: Before

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AfterYour Right to Get Your Credit Report

When we evaluate your application, we useinformation given to us by the credit reporting agencylisted below. That information helped us makethe decision, but the agency itself played no partin the decision. Therefore, we are responsible for explaining to you why we denied your application.

Under the Fair Credit Reporting Act, you have the right

1. to know what information is in your credit fileat this agency. You may get the information by contactingTransUnion, 1234 Any Street, San Francisco, CA, or byCalling 1‐800‐555‐5555.

2. to receive a free copy of your credit report from the same agency.You must request the report within 60 days after the date on this notice.

3. to dispute any inaccurate or incomplete information you find in the report with the reporting agency.

• decide about print 5 seconds (or less); web 3

• read 28% slower online

• use documents as reference

• read “just in time”

• interpret and create meaning

• explain to others

What readers do

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Missouri

Effective August 6, 2015

Addendum To The Consumer Account Agreement

Who does this Addendum affect?

This Addendum affects Bank employees who opened an account at our Employee Service Center in St. Louis, MO.

What does this Addendum cover?

This Addendum covers the Service Fees in the Consumer Account Fee and Information Schedule (“Schedule”) and uses the same terminology you’ll find in the Schedule. While this Addendum addresses Service Fees for specific accounts, all other aspects of the Schedule remain the same.

How does this Addendum affect accounts?

Most customers have to pay a $2.50 fee every time they use a non-Bank ATM to make a cash withdrawal in the U.S. But if you are a Bank employee who is affected by this Addendum,:

• You will not be charged the $2.50 cash withdrawal transaction fee.

• We will reimburse you for up to three of the non-Bank ATM surcharges each statement cycle.

Please note: This Addendum only applies to current Bank employees.

What readers need to know

Use the active voice

Before: This general industry and Peer Group data is gathered

by the Consultant and presented to the Corporation in reports

that provide an assessment and comparative analysis of

executive officer compensation to this competitive market

compensation. 35 words; 23rd grade

After: The Consultant gathers general industry and Peer Group data. She uses this data to

• compile reports, • assess executive officer compensation, and • compare compensation to the relevant market. 29 words; 13th grade

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Be succinct

Before: Annual performance goals for Our Company are

generally developed, initially, by ABC Co., an independent

consulting firm with expertise in EVA‐based incentive programs.

The firm’s recommended performance goals are reviewed by

the committee. The committee approves the goals with any

changes the committee determines appropriate. 47 words; 12th grade

After: ABC Co., an independent consulting firm with expertise in EVA‐based incentive programs developed our annual performance goals. Our compensation committee will review and approve the goals. 25 words; 11th grade

Common words and phrases

Before: NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER

THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE

IN THIS JOINT PROXY STATEMENT/ PROSPECTUS, AND, IF GIVEN OR

MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE

RELIED UPON AS HAVING BEEN AUTHORIZED. 44 words, 25th grade

After: You should rely only on the information contained in this document or that we have referred you to. We have not authorized anyone to provide you with different information. 29 words, 12th grade

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Design for easy reading

Use headings

• How do we benchmark pay

for named executive officers?

• Compensation for Executive Officers

• Benchmarking Pay

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• Emphasize what readers can | may do

• Eliminate negative words;

increase positive words

Use positive language

Use positive language

Before: If you prefer that we not disclose nonpublic personal information about you to nonaffiliated third parties, you may opt out of those disclosures, that is, you may direct us not to make those disclosures (other than disclosures permitted by law.) 40 words; 22nd grade

After: If you prefer that your nonpublic, personal information remain private, you must opt out of our sharing that information. Some disclosures can be legally shared even if you opt out. 32 words; 11th grade

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Before: This notice is to inform you that, on Nov. 12, 2013,

the North Carolina Department of Revenue (“NC DOR”) announced a change in the income tax statutes that will result in a 4% NC state income tax withholding rate being applied any IRA distribution occurring after Jan. 1, 2014 unlessan updated distribution election form is completed and returned to us with different instructions. 65 words, 1 sentence, 15th grade level.

Avoid wordiness

After: If you took an IRA distribution after Jan. 1, 2014, the North Carolina Department of Revenue (NC DOR) requires that we increase your state income tax withholding rate by 4%. This change occurred on Nov 12, 2013. If you wish to send us different instructions, please fill out the enclosed form. 54 words, 3 sentences, 8th

grade level.

• Eliminate unnecessary words.

• Use verbs, not nouns.

• Keep adjectives, adverbs near nouns.

• Sound like a person, not a computer.

• Shorten common phrases.

Avoid wordiness

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Before After

make a determination of We should determine

make an adjustment We will adjust

A confirmation should be made You should confirm the

made an agreement to We agreed to

negotiations need to be made We need to negotiate with

make a decision about Decide when you can

Avoid wordiness

Code of Ethics for NetflixIII. Disclosure Senior Financial Officers are responsible for ensuring that the disclosure in the Company's periodic reports is full, fair, accurate, timely and understandable. In doing so, Senior Financial Officers shall take such action as is reasonably appropriate to (i) establish and comply with disclosure controls and procedures and accounting and

financial controls that are designed to ensure that material information relating to the Company is made known to them; (ii) confirm that the Company's periodic reports comply with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act] of 1934; and (iii) ensure that information contained in the Company's periodic reports fairly presents in all material respects the financial condition and results of operations of the Company. Senior Financial Officers will not knowingly (i) make, or permit or

direct another to make, materially false or misleading entries in the Company's, or any of its subsidiary's, financial statements or records; (ii) fail to correct materially false and misleading financial statements or records; (iii) sign, or permit another to sign, a document containing materially false and misleading information; or (iv) falsely respond, or fail to respond, to specific inquiries of the Company’s independent auditor or outside legal counsel. 32.5 grade level

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List information4. Disclosure

Senior Financial Officers must ensure the disclosure in the Company's periodic reports are full, fair, accurate, timely, and understandable. To do so, Senior Financial Officers will

• establish and comply with a) disclosure controls and procedures, and b) accounting and financial controls designed to ensure that material information relating to the Company is known;

• confirm that the Company's periodic reports comply with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• ensure that information contained in the Company's periodic reports fairly presents, in all material respects, the Company’s financial condition and operation results.

Senior Financial Officers will not knowingly

• make, or permit or direct another to make, materially false or misleading entries in the Company's, or any of its subsidiary's, financial statements or records;

• fail to correct materially false and misleading financial statements or records;

• sign, or permit another to sign, a document containing materially false and misleading information; or

• respond falsely, or fail to respond, to specific inquiries of the Company’s independent auditor or outside legal counsel. 21st grade

The Direct Deposit Advance service is an expensive form of credit for short‐term and emergency needs. It is not recommended as a long‐term financial solution. For every $20.00 you borrow, the Advance Fee will be $1.50. For example, if you borrow $100, you will pay $7.50 in fees; if $200, you pay $15.00; if $300, you pay $22.50; if $400, you pay $30.00; and if $500, you pay $37.50.

Use visuals

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The Direct Deposit Advance service is an expensive form of credit for short‐term and emergency needs. It is not recommended as a long‐term financial solution. For every $20.00 you borrow, the Advance Fee is $1.50. For example

If you request Your Advance Fee will be

$100 $7.50

$200 $15.00

$300 $22.50

$400 $30.00

$500 $37.50

Use visualsUse visuals

5. What are existing laws | regulations that require plain language?

• Dodd‐Frank • CFPB• TILA• RESPA• CAARD Act

• SEC: Form ADV, Part II• HIPAA• GLB• ERISA• ACA• D of L 401(k) Fees

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“Too many lawyers believe [that] it is

essential to legal English that one write as

pompously as possible, using words and

phrases that have long since disappeared

from normal English discourse.”Hon. Antonin Scalia, U.S. Supreme Court

3. What are the legal issues? Legal issues

“There are no serious obstacles to writing clearly and plainly – if writers have the will and the skill to do it.” Joseph Kimble, JD

Copying not required

• “…incorporate the following or equivalent language…”

• “…state a notice in substantially the following form...”

• “…written notice containing all of the following information…”

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HIPAA: “A covered entity can satisfy the plain language requirement if it makes a reasonable effort to organize materials for needs of readers…”

GLB: Notices must be “clear and conspicuous.”

ERISA: “…written in a manner calculated to be understood by the average plan participant.”


A mortgage loan disclosure that• uses plain language for understanding• succinctly explains the information • contains a clear format and design

Readers unable to determine• 90% up‐front fees• 80% APR • 65% penalty

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http://www.consumerfinance.gov/knowbeforeyouowe/


CAARD requires

• 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

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• improve format

• expand content

• ensure easy access

• use plain “English”

• use narratives

New requirements

2. Plain English. The items in Part 2 of Form ADV are designed to promote effective communication between you and your clients. Write your brochure and supplements in plain English, taking into consideration your clients’ level of financial sophistication. Your brochure should be concise and direct. In drafting your brochure and brochure supplements, you should: (i) use short sentences; (ii) use definite, concrete, everyday words; (iii) use active voice; (iv) use tables or bullet lists for complex material, whenever possible; (v) avoid legal jargon or highly technical business terms unless you explain them or you believe that your clients will understand them; and (vi) avoid multiple negatives. Consider providing examples to illustrate a description of your practices or policies. The brochure should discuss only conflicts the adviser has or is reasonably likely to have, and practices in which it engages or is reasonably likely to engage. If a conflict arises or the adviser decides to engage in a practice that it has not disclosed, supplemental disclosure must be provided to clients to obtain their consent. If you have a conflict or engage in a practice with respect to some (but not all) types or classes of clients, advice, or transactions, indicate as such rather than disclosing that you “may” have the conflict or engage in the practice.

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6. How can your corporation benefit from using plain language?

• be truly transparent

• restore public trust

• make values clear

• maintain corporate integrity

• manage risk

• increase numbers of clients

• affect the bottom line

how to meet compliance requirements for plain language · 1/4/2016 1 how to meet compliance...

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