Who can we trust with our money?

MORE than anything else, most of us fear being ill or poor in old age. Yet no matter how sensibly we save, how carefully we try to insure against sickness or disaster, for all but the very rich, security remains as elusive as the philosopher's stone.

The latest scandal, revealed in Wednesday's Daily Mail, is that about £150m of homebuyers' money is being handed over in commission on failing endowment mortgage policies.

Earlier this week, Sir Howard Davies, chairman of the Financial Services Authority, also criticised financial services companies and ordered them to compensate some 50,000 savers who put money into 'split capital investments' to fund pensions and school fees. Investors were told that these were as safe as houses. They have proved - well, about as sound as an old Glasgow tenement block. The fact that this is becoming a familiar story (with millions of savers now facing shortfalls on endowment mortgages) makes it no less a shocking one.

A friend approaching retirement said to me ruefully the other day: 'All the years of my working life that I've been a borrower, interest rates were in double digits. Now that I'm in sight of living on savings income, interest rates are rock bottom and likely to stay that way.'

For some people, bad investment advice simply means not being as well-off as they had hoped. But a great many others face worry, even real hardship, as a result of crumbling income. Having saved carefully all their lives, they find that those bewildering institutions the markets have turned on them. Their fear and anger towards those who have let them down - the 'experts', the City, successive Governments - know no bounds.

It was a key plank of Government policy during the years of the Tories to 'empower' people, to give us all responsibility for our own affairs, through personal saving and private health insurance. Yet I have always thought there was a basic flaw in this ideal. The vast majority of us do not understand money. We are frightened of being in charge of our own affairs. And now we find that the professionals in whom we are invited to put our faith are as much bunglers as their clients.

Sir Howard Davies, the regulator, tells us officially that many financial services advisers have betrayed their clients. Yet whom, then, do we trust, to protect our wealth and old age?

It is unnecessary to feel much sympathy for people who put money into crazy schemes offering annual returns of 25%. Risk investors deserve the burns on their fingers. But we are talking about people who did not want risk and did not demand sky-high returns. They simply wanted safety, and safety is what they have been denied.

More than 20 years ago, I asked an expensive accountant to recommend a pension scheme. He came up with a proposal (and in those days, I was so ignorant that I did not know he received commission) and I signed on the dotted line. I was lucky - unlike some of the latest victims, I did not lose everything. But years later, I discovered that I had signed up for one of the worst-performing pension schemes of modern times.

More recently, still nursing my ignorance, I asked another financial adviser to look after my personal pension scheme, asking only that my investments should be safe, and should have nothing to do with dotcoms. In the good years of the 1990s, my modest fund underperformed the market in every year but one. Oh well, I thought, that's the price of safe investment. Yet when shares fell, my fund slipped even more steeply than the market.

I won't plead poverty - I should be able to look after myself. But the thought is always in my mind: if somebody like me, who supposedly has access to the 'best' advice, takes a mauling from the experts, then what hope is there for millions of people, far less able to protect themselves?

A friend who is one of Britain's most distinguished City Editors confessed that he had put money into Equitable Life, the most spectacular of the recent disasters. If he can't save himself; then what can we do?

When at last I decided to change my pension fund brokers, after their pretty miserable showing, my financial adviser invited me to help choose the successor. I would not even begin to try, because I knew I would understand next to nothing that was being said to me. I saw no choice except to leave it to my adviser, and hope for the best.

Now, a City expert reading this will say: anybody should be able to understand that markets, and interest rates, go down as well as up. No law says share prices must continue to soar as they did in the 1990s. Yet today, we know that many mortgage brokers devised endowment schemes which relied absolutely on interest rates remaining high - or at least, higher than they are today.

Few of us expect untold riches to flow into our bank accounts. But we do expect that, if we take out an endowment which a professional broker says will eventually pay off our mortgage, such an assurance will come good. If it does not, if millions of people are left to make up shortfalls of thousands of pounds, it is not only their bank accounts that suffer - it is our trust in the whole smooth, plausible edifice of financial services.

Many people have now got to the point where they regard the High Street clearing banks as enemies - and incompetent enemies - of small private clients. As for the City, we know that those who work in it prosper mightily. But the old charge, that the professionals fill their own pockets while leaving the public hung out to dry, now receives an authoritative endorsement from Sir Howard Davies.

The misery and uncertainty many savers feel today about their future relates directly to our other great fear - that we might get ill, and prove unable to get proper health care. Most of us are frightened of private health insurance for exactly the same reasons we have come to fear and mistrust the financial services industry. Private health schemes are very expensive - and you cannot count on them. I am pretty healthy, yet I was recently rejected for chronic health insurance by a big company. My doctor said wryly: 'You're 56, and they don't want people like you.'

Once again, I need no sympathy, because if the worst comes to the worst, I can pay my own bills. But what about all those millions of people who have no hope of doing that? They don't trust private health insurance. Without the muscle of a corporate scheme behind them, they are surely right not to. And that is why people continue to insist that the NHS must be made to work. They are terrified that if, instead, they are asked to put their trust in the market, in private health insurance, they will find themselves in exactly the same fix as so many endowment mortgage holders today.

The sharks of health insurance will take refuge in the small print to avoid paying up, just as the sharks of financial services are twisting under water today, to escape the harpoons of the Financial Services Authority. Capitalism may be a better system than any other, but if ordinary people are to feel safe in its hands, it must find ways of doing far more to protect their savings and their faith in the future than it is achieving today.