James Moore: Should the FSA police financial products?

Outlook It is fair to say that the financial services industry has been a rotten servant to consumers over the years. The mis-selling of pensions, endowment policies and home income plans are real scandals. Even those unaffected by them have hardly been well served by the suite of overly expensive, unwieldy and horribly complex products peddled by the industry.

The trouble is, would products designed by the Financial Services Authority or its successor (whatever the new consumer protection authority is finally called), do any better? Well, the FSA is not actually proposing such a move but its hyperactive chairman, Lord Turner, does say that he might need the power to ban dodgy products rather than simply policing the advice offered to consumers before they buy.

Is this really a good idea? Given the vandalism the watchdog plans to inflict on the housing market (the Mortgage Market Review would ban millions of perfectly good home loans), it is hard not to have serious doubts.