Today we have some striking admissions from the Financial Services Authority.
*That financial firms cannot be trusted to design reliable investment and savings products, let alone sell them without many people being ripped off.
*That they may have to be prohibited from selling their wares to some people.
*That the FSA will have to intervene at the design stage to stop the mad inventors coming up with products which will earn them money but are bound to let people down.
It is like saying that we can't rely on the ice cream man to make and sell lollies and cornets which don't put his customers in the infirmary. We have to take over the design process, ban him selling some flavours to certain customers as well as look over his shoulder to make sure he charges the right amount.
Until now the FSA has concentrated on what it calls the "point of sale", to ensure that people are treated fairly.
But its discussion paper describes a litany of rip-offs which haven't been prevented by this approach: pension mis-selling, dodgy endowments, split capital investment trusts, structured products and now Payment Protection Insurance or PPI.
It paints a picture of a financial services industry which may be congenitally unable to look after its customers.
The FSA has been preparing for this about turn for a while. As its chairman, Adair Turner, said last summer:
‘Looking back over the last 20 years, what we see is a series of waves of major customer detriment – products mis-sold, huge and rising numbers of complaints, and then Financial Ombudsman Service (the Ombudsman Service) and FSA intervention to require compensation against specific complaints...
And as the waves followed one after another it became increasingly obvious that there are problems in retail financial services which were not going to be solved simply by demanding fair disclosure in the sales processes – that there are deep reasons why retail financial services markets do not work smoothly and can produce adverse effects for consumers.’
But the FSA was set up nearly 13 years ago. It has taken that long for our financial watchdog to conclude that banks, insurance companies and financial firms need beginning-to-end policing in their dealings with their own customers.