William Kay: The savings industry sharks would learn from a spell in prison

As they headed off with their buckets and spades, the 11 MPs on the Treasury Select Committee doubtless reflected on a job well done. This week they delivered a gentle kicking to the savings industry, saying that "complex and opaque practices and products have been allowed to persist for too long" and accusing savings providers of failing to adapt to the modern world, low inflation and low interest rates.

This sparked a predictable rush for the moral high ground, where the early arrivals had an enjoyable time beating their breasts and scourging themselves and their peers with barbed whips. Bestinvest Brokers said that "poor moral standards within financial services means the Government has a greater chance of turning water into wine than resuscitating long-term savings".

A discount broker, Willis Owen, asked: "How can people be expected to get into the savings habit, as the Government intends, when their financial services providers so cynically abuse their trust? It's simply distasteful."

The industry's trade bodies preferred to pour oil on troubled waters. The Association of Investment Trust Companies (AITC) said: "This important report is a welcome first step towards restoring investor confidence in the financial services industry." That, you can take it as certain, will have sent some of the AITC's members apopleptic and convinced them even more strongly than before that the association has sold out to the hated consumer lobby.

For the Treasury committee's report makes it clear that the finance industry is in denial. A leading actuary said that financial education was a waste of time, as a slick salesman could always beat an informed consumer. Maybe he is speaking from experience. Simon Ellis of the Investment Management Association said he complained to the regulator about companies that try to deliver something for nothing, but nothing was done. It's called passing the buck.

The committee makes some useful recommendations. It calls for better product information, more education, more openness about commissions. But above all the report wants the savings industry to rethink the nature of its products, how it sells them and its after-sales service. This is all very well, but it is like asking killer sharks to turn vegetarian.

So let's sharpen the stakes a little. The Inland Revenue insists on pre-approving tax avoidance schemes, so why not get the Financial Services Authority to pre-approve all new consumer financial products? Yes, it would mean the FSA's bureaucrats getting it in the neck if they let a howler slip through the net, but a little personal responsibility never hurt anyone.

Then there's the sales process, a subject of much dispute among slick sellers and compensation-hungry consumers suffering from convenient amnesia (yes, I know you're out there). Here we should take a leaf from police interviews: record them, with a copy for each side.

Of course, there would still be law-breakers. Answer: make mis-selling a criminal offence. Jail terms for Ernest Saunders, Gerald Ronson and others soon cleaned up boardroom behaviour in the 1990s. A spell in Belmarsh for offenders might do the savings industry a power of good.

* Only the brave or the foolhardy predict the price of gold. It is a global poker game in which so many factors are involved that are never published, from Indian women deciding it is a fashion must to deposed dictators hiding it in mountain retreats.

But today I am going to suggest you buy a little gold. The price has been bouncing around between $385 and $405 an ounce for several months, but over a City lunch table this week I was told with a nod and a wink that it is poised to break upward out of that range.

Jewellery is the main commercial use for gold, and that continues to rise. But supply is failing to keep up, largely because the strong South African rand means it is not worth stepping up bullion exports from that country.

It's worth a punt, and you don't have to have lumps of the stuff around the house. You can take a spread bet, or buy Gold Bullion Securities, quoted on the stock market.

This is not the time to sell Abbey shares

When Abbey National's building society customers were given "free" shares in 1989, they little imagined that they might one day end up being part owners of a Spanish bank. For the past 15 years they have by and large sat back and collected dividends, though the more savvy will have glanced uneasily at a share price which has come down from £14 to £5.

This was always going to be the testing time for Abbey, as its chief executive, Luqman Arnold, readily conceded. Since Mr Arnold was appointed in December 2002 he has taken the group half-way through a three-year transformation process which appeared to be going well. So well, in fact, that a bidder was going to be very tempted to make a move now, rather than wait for the full fruits of the transformation to show through in a revived share price.

Unless you need the cash, this is not the time to sell Abbey shares. It has been slightly above the level of the bid from Grupo Santander, which suggests that some people think there might be a counter-bid. In any case, there is no rush. Abbey shareholders will not formally vote on the bid until October.

Longer term, the question is whether an Abbey shareholder wants to maintain a share in the banking sector and, if so, whether it should be in an international bank or one concentrated in the UK. HBOS, which produced glittering results this week, largely operates in Britain. Barclays and HSBC arguably have a better global spread than the opportunistic Spaniards.

w.kay@independent.co.uk