homeintroductionoverviewcreativitycommunicationcontroltrainingbrochure pdfnewsnews archiveislamic bankinginterviewsceo's cvcharitable workphotographsbookshoppublicationsthoughtssearchdisclaimerregistercontact

publicationsthoughts

"Sadly misunderstood APR deserves a much better explanation"  14 June 2004, The Financial Times, London financial timeslink

Sir:  Your Notebook editor, Robert Shrimsley suggests that the APR (annual percentage rate) is "about as valuable to the average consumer as an Aramaic aphorism". (June 9th 2004)

It is so sad that even the pre-eminent newspaper is party to the general view amongst politicians and the media that such a simple concept is complicated. The problem is not that the essential APR is difficult to understand or confusing. It is just that it is badly explained - perhaps deliberately by some. Whilst the APR is not beyond the scope of anyone with "O" level maths I can't speak for more modern qualifications. But no weighty "A" level calculus is required.

Sadly this country's great communicators and leaders of government and business, many of whom are no doubt proficient in pithy proverbs in Aramaic or Assyrian, are hopeless at elementary maths and moreover rather than expressing shame are proud of it. On the other hand our scientists and mathematicians are often appalling communicators. Academia, rather than improving its communications skills and explaining the subject clearly is happy to go along with this sorry state of affairs by describing the sums as "so difficult to understand".

The APR is merely a measure. It accurately calculates and represents the average annualised percentage cost of borrowing or rate of investment return based on the numbers fed into it. Spurious inputs lead to spurious measures.
After all, a watered down beer can still be measured in pints. Don't knock the APR if the inputs aren't clearly set out.

But of course Mr. Shrimsley was spot on when he suggests that accurate consumer information does not dramatically affect behaviour as can be seen from cigarette packet health warnings.

yours faithfully
Warren Edwardes, ceo
Delphi Risk Management Limited
 
yours faithfully
warren edwardes, ceo
delphi risk management ltd
3 hyde park steps
st. george's fields
london W2 2YQ, UK
 

related articles:

APRs - misleading, misused or misunderstood?

"APRs? no problem"

"Mortgage repayment penalties"

"Guaranteed annuities - no excuse for not managing risk"

11 February 2003   Warren Edwardes interviewed on APRs for the BBC 2 Television programme "working lunch". details 

Delphi Risk Management: Delphi creativity Delphi communication & Delphi control are the Innovation, Communication & Risk Management arms of Delphi Risk Management Limited 

homeintroductionoverviewcreativitycommunicationcontroltrainingbrochure pdfnewsnews archiveislamic bankinginterviewsceo's cvcharitable workphotographsbookshoppublicationsthoughtssearchdisclaimerregistercontact

If you have reached this page directly from a search engine visit Delphi's full websiteespaņol

 top