Do you need to shout to make a point?

UNSOLICITED PHONE calls from firms touting for business are, like the common cold, something out there that has to be lived with. I had one from a very persistent young man who practically yelled at me that I was mad not to claim for compensation I was “legally entitled to”. How did he know? In the event, I never got as far as establishing what the caller presumed my grievance to be. It was enough for me that he obviously had his own motive for advancing his championship of my alleged “claim”. End of call.

Leaving aside the instinct to mistrust anyone who needs to shout to make his point, I wonder where all this is leading.

Last year, banks paid out nearly £2 billion to people who had been “mis-sold” payment protection insurance (PPI). The attraction of the cover originally was that it meant loans would be paid off if the borrower lost his job or was ill. But it was subsequently decided that terms were not spelled out clearly enough at the time, or at all.

Now the Financial Services Authority – the statutory watchdog in these matters – wants to encourage anyone who has not so far complained, and who has a valid claim, to come forward. The authority anticipates that as many as 12 million carefully worded letters may have to be sent out.

I have no hesitation in reaching for a long spoon when supping with banks. In the past many of us were easy meat. I accept poor financial education also had, and has, something to do with it. But to me the mis-selling of PPI has an echo of the same sort of claims that were made about endowment mortgages a decade ago.

These products were universally accepted as a prudent mechanism and widely resorted to – until lower stock market returns on the insurance side meant many householders got into difficulties. The FSA promptly led a hue and cry.

Their line was that unless it had been spelled out that an endowment might not pay off the mortgage, that constituted mis-selling for which compensation was the appropriate response.

What this means is that the onus is on the seller of financial products to make sure the buyer knows of potential disadvantages way into the future. A government agency can intervene years later to retrospectively alter the terms of a bargain freely, though perhaps unwisely, entered into. What has happened to the old maxim of caveat emptor – buyer beware?

There is fraud and there is buying a pig in a poke and they ain’t the same.

For my money, there is something not quite right about relying on a third party, however benevolent, to step in when circumstances change and we are out of pocket.

Of course, there will be many who say they were led by the nose and they have neither the time nor the expertise to wade through acres of small print to check they are getting what they think they are paying for. As I usually struggle to understand the explanation of the explanation where finance is concerned, I have more than a little sympathy for this view.

My beef is not with the crusaders for clarity in transactions. Quite the contrary, in fact. What does concern me is that service providers in any form, not just banks, will resort to ever more circumlocution to cover themselves, and that this must in the end make everything more expensive.

My wife and I are fortunate enough to have Individual Saving Accounts (Isas). You would not believe the amount of mandatory paperwork this generates. Who ultimately pays for that? I think we know.

There is also a wider perspective. Not long ago, the World Bank produced a graph illustrating the success of countries that have used innovation to achieve economic “breakout” since the second world war. The good guys were Japan and South Korea, with Israel, Hong Kong and Taiwan not far behind.

So I ask myself: where will the go-ahead firms gravitate? To countries that offer the sanctuary of the rule of law in commerce but leave the rest to the market, or to those where the rule of law is taking consumer protection to new levels?

Are we sacrificing vital long-term competitiveness for short-term equity?

Presently, we in Britain are in a phase of wanting – nay demanding - fairness above all and there are understandable reasons for that. Finding the best way of going about it, though, is harder than it appears.

Mistrust anyone who needs to shout to make his point.