Investors stung by the endowment-policy and pension-plan mis-selling scandals, and in possession of poorly managed unit trusts that have failed miserably to outperform the FT-SE index, can hardly be blamed for coming to the conclusion that they might just as well make their own investment decisions rather than rely on the men in grey suits. Sadly, however, the European Commission believes that we cannot be trusted to make such decisions by ourselves. Its new Investment Services Directive contains a stinging clause that would oblige execution-only stockbrokers to assess their customers’ competence before allowing them to use the service. Such obligations, the stockbrokers warn, will mean a sharp increase in the cost of trading for millions of small investors. At present, such companies charge as little as £10 a time to buy or sell shares because, unlike pension companies, they do not hive off hefty commissions to an army of ‘personal financial advisers’ employed to push policies to the public.
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