View from City Road: Politicians should act to safeguard investors

With every report that comes out, it gets worse. The pensions industry has been falling down on its most basic professional practices - the gathering of information and research into clients' financial positions. Hardly a form seems to have been filled in correctly, judging by the latest survey. And all these mistakes happened before any investment advice was given.

Five years into the new investor protection regime, it is particularly unedifying that many of the problems have cropped up at big firms whose senior people populate the boards and committees that draw up the rule books. They demand support for self-regulatory organisations yet fail to make their own people carry out simple fact-finding tasks.

If the pensions and life assurance industry cannot get this right, how can its customers have confidence in anything else it does?

The Securities and Investments Board no doubt feels vindicated by its success in unearthing so much malpractice. It might have got there earlier if it had not spent so much time in previous years wrestling with regulations instead of chasing miscreants. Rather than an excuse to consolidate the present system, the pensions fiasco is raw material for another look at regulation.

Andrew Large, chairman of the SIB, was forced by the Government's refusal to contemplate new legislation to put a narrow focus on his review of investor protection.

Luckily, there is hope of a more thoughtful result from the Commons Select Committee on the Treasury, which has just announced plans for an inquiry next year into the adequacy of the Financial Services Act. The committee will attend, among other things, to the increasing fuzziness of the boundary between banks and other financial institutions. And it should look carefully at the attractions of a streamlined statutory regulator rather than our present hotchpotch.