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Where is scrutiny of Governments?

Restoring confidence in savings has become a holy grail in financial services.

A few suggestions, mostly but not exclusively from the Treasury select committee, include traffic-light-style risk warnings on products, stress-testing for different market conditions, reforms to commission, greater scrutiny of marketing literature on execution-only sales and concerns about depolarisation.

The concerns about depolarisation will certainly take many by surprise and although it is unlikely to affect the direction of a reform bulldozed through by the Treasury, it may help to concentrate minds about the pitfalls of the new system.

Some of these suggestions may be helpful while others are less so but they all appear to cover operational issues either in regulation or in how providers interact with distributors and how they interact with customers and clients.

The big omission is any critique of what Governments have done over the past 10 or 15 years, not just this Labour Government but also the previous Tory administration, and include tax policy, savings policy and regulation.

The first big failing came with Government-advocated transfers from company pension schemes in the 1990s, runs through cuts in tax breaks and includes the ducking of any responsibility in the Equitable Life debacle. It might also require an explanation of the consumer detriment from endowment mortgages, although this is less driven by Government policy.

Select committees were set up to scrutinise Government departments. If the Treasury select committee fails to scrutinise the Treasury in the case of restoring confidence in savings then any ideas may lack a proper foundation and the holy grail will remain as elusive as ever.

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