A number of separate debates have rumbled on in parallel over the past few years.
Simplified products are a worthy enough concept but, owing to fears of misselling, never seem to take off. Meanwhile, caveat emptor raised its head again recently, only to be pushed firmly back down in the sands of time, where it belongs so far as most advice is concerned.
Financial Services Compensation Scheme funding is a perennial problem. Never a year goes by without contribution levels being pushed up.
Product approval as a solution to limit the scope for misselling was looked at by the FSA, which shied away, probably frightened of the liabilities if it got it wrong, which it would have, sooner or later. Neither did product approval arouse much enthusiasm in the industry, with concern centring around the stifling of innovation.
Lastly, in the wake of the financial crisis, we have the debate over how financial wrongdoers should be penalised.
If we draw these debates together, we might get somewhere useful.
Certainly, purchasers of financial products who pay for advice are entitled to expect it to be appropriate to their needs. But even so, it has long been recognised that individuals are under a general obligation to use some prudence over what they buy.
For that reason, all compensation schemes have always involved limits and excesses to some degree.
Caveat emptor has its place. If individuals choose of their own volition to go in for spread betting or trading options, that is their affair and few would claim they should be protected from themselves.
With most of the problems which cause the top-up demands from the FSCS happening around the interface between riskier products and advice, is it not time to look at limiting the products covered by the FSCS?
Advice is usually deemed poor at the point when an investor has lost money. Moral hazard, however, is not limited to investment bankers.
Does anyone seriously doubt that some clients are happy to take on riskier invest-ments, safe in the know-ledge they can scream for compensation if it all goes wrong?
Limiting the FSCS to an approved list of products would go a long way to solving all these problems.
As always, the difficulty would be where to draw the line but it should not be beyond the wit of a board comprising advisers, regulators and consumer representatives to come up with a list that would satisfy 95 per cent of consumers and advisers alike.
Exclude the esoteric and high risk from FSCS eligibility and make it law that they carry a health warning to that effect.
Product innovation would not be stifled and the rest of us would not be insuring the industry the way we are now.
Neither could there be accusations of “nanny state” interference. Those wanting to play in the Wild West of overseas property developments and the like would not be prevented, but the rest of us would not end up paying for it.
The list would largely be the dreamed-of simple products range.
Finally, just to deter any mis-portrayal of a product as covered by the FSCS when it is not, we should use the big stick suggested for bankers by Labour MP Chuka Umunna and send the dishonest to jail, preferably with the reintroduction of hard labour.
It probably will not happen but if it does, you know who to thank when FSCS bills shrink.
Neil Liversidge is managing director at West Riding Personal Financial Solutions