Do they think we’re daft? Or am I being stupid?

How stupid do they think we are? By “we”, I mean the investors of Britain. By “they”, I mean the massed ranks of European commissioners, national financial regulators, and non-governmental public bodies. And, as for “how stupid” . . . well, it seems the answer must be “very”.

Recent weeks have seen the publication of a raft of consultation documents, guidance notes and draft new laws that appear to operate on the assumption that all private investors are idiots. Apparently, the last thing we need is freedom of choice, access to low-cost financial products, and competition for our cash. What we really need is protection from ourselves and our misguided attempts to make investment decisions.

Take, for example, the 83-page consultation paper on the European Commission’s review of the Markets in Financial Instruments Directive (Mifid). Intended as a starting point for Mifid II – the not-at-all eagerly anticipated sequel to the Mifid I regulations of 2003 – it is full of the unintended consequences that accompany clumsy super-statist intervention. Most offensive among these is the proposal to ban execution-only sharedealing, and non-advised funds sales.

Under Mifid I, execution-only investment services are still permitted if they trade “non-complex financial instruments”. However, uncertainty over what constitutes a non-complex product – and, presumably, what constitutes a simpleton investor – has prompted the internal market commissioner to propose removing article 19(6) of the original directive – effectively banning all execution-only dealing. He even writes “in support of this option”, saying: “It may be argued that retail clients should always expect a higher standard of service from intermediaries.” In other words, we nincompoops will always be better off paying for advice from an intermediary, even if we know that we simply want to buy a FTSE 100 exchange traded fund at the lowest possible cost.

If implemented, a ban on execution-only investing would prevent us, or should I say protect us, from buying funds through discount brokers and managing our pensions using low-cost self-invested personal pensions (Sipps). As one independent financial adviser put it: “Whilst the rest of world moves towards freedom of choice and action (even communist China, eventually), we in Europe drift deeper and deeper into a dated and nightmarish brand of French-style neo-Stalinist dirigisme.” Quite.

Then take the government’s pensions bill, published this week. It confirms that, if employed, we will be automatically enrolled in a company pension for our own good from 2012, or in the new National Employment Savings Trust (Nest) if no company scheme is available. This is no bad thing if the schemes are good – but the “one size of dunce’s cap fits all” principle means that most are likely to level down their contributions and benefits to the state-ordained minimums for Nest.

As is often the case with nannyism, there is also a tendency towards the twee language of the nursery in the “phrasebook” used to explain the new rules. In fact, because “our research told us that existing pensions language can be a barrier to understanding”, Nest even tries to avoid the word “pension” altogether. Apparently, we are only capable of grasping the idea of little pots of money. Hence, Nest doesn’t say “pension”, it says “a way of building up a retirement pot”. It doesn’t say “accessing your pension”, it says “opening your pot”. Nor does it say “pensionable age”, it says “the age you open your retirement pot”. Daft. Or should I say potty?

“This is absolutely not about dumbing down or patronising people,” insists Nest’s chief executive Tim Jones, aka “big man holding lid of pot”. But wouldn’t it be far better to lift people up to higher levels of understanding, and stretch their capacity for financial decision-making? Is it beyond the wit of man to work out the meaning of “decumulation”, “fiduciary responsibility” and “trivial commutation” for themselves? Isn’t it perfectly obvious that they mean, er, um . . . 

OK, perhaps Nest does have a point about the language, if not the freedom of choice, of the new pension regime. But if we are going to have plain-speaking imposed from above, shouldn’t it apply to all investments?

At the beginning of this week, Money Marketing magazine reported that the FSA has been privately advising fund managers against using the term “absolute return” when launching new funds – because it creates a false impression that growth is guaranteed. Even some fund managers agree. Richard Skelt of Fidelity fears that investors may be being misled by the term, especially as a number of funds have failed to deliver a positive return. Two other fund managers are now considering renaming their funds as “target return”, instead.

If we had consistent directives on fund names and marketing, then perhaps we could all be trusted to choose investments for ourselves.

matthew.vincent@ft.com