Gareth Howlett: Blame game too easy, but questions need answering

Except it isn't quite as simple as that. Let me explain why by telling you a "what if?" story.

Take 1,000 average club golfers and let them hit one shot each on a par three hole. These thousand shots will be all over the place. Many will miss the green, but a fair number will be decent shots and a few will be very close indeed.

Now get a professional to take one shot at the same hole; he will almost certainly hit the green, he may be close to the pin, but there will be a select group of hackers even closer.

Now repeat the exercise, this time with the pro playing first. Another solid shot to the heart of the green. When the club golfers play, there will again be some shots nearer … but they are unlikely to be the same players who beat the pro the first time. Do it twice more and you can pretty much guarantee that not one of the hopeful thousand will have been inside the pro every time. The pro may or may not have more innate skill than any of his challengers, but he does this job every day, all day, for a living and he has been doing it for years.

You wouldn't let yourself be operated on by an amateur surgeon, and neither would you trust your life savings to an untrained, part-time fund manager.

However, the ordinary investor will look at the events of the past three years, a landscape littered with the wreckage of several once-great financial institutions laid low by some of the finest minds in the City and Wall Street, and conclude, not unreasonably, that while "amateurs built the Ark, professionals built the Titanic".

The financial sector as a whole has not acquitted itself well in recent years, and there is still a huge effort required if investment and banking are to resume their proper place as servants not masters, performing the vital matchmaking task of bringing together those who require funds (not just businesses and governments but ordinary people), and investors who want to make a decent return on their savings.

There are three groups here who need to play their part: governments, the financial sector itself, and customers.

The first two have fairly patchy records which have been subjected to thorough scrutiny. Governments may have stopped the house burning down in 2008-9, at considerable cost, but they can be accused of having allowed flammable materials to pile up during the boom years.

Even now, true to the politicians' maxim of never letting a crisis go to waste, there are attempts to influence the reform process in order to gain local advantage (witness the attacks on "Anglo-Saxon speculative capitalism" from France and Germany).

Fund managers and bankers have not, on the whole, done much better; many appear to hope that if they sit tight, the storm of popular loathing will abate and it will be back to business as usual.

Customers have got off lightly in this blame game. It wasn't only the professionals who were blinded by greed, and it wasn't only the regulators who failed to ask tough questions. So long as there is a demand for snake oil, there will be snake-oil salesmen.

We should start giving the "experts" who are trying to sell us something a real grilling, starting with the following questions:

n How much of my money is actually being invested, and how much is going to middlemen like yourself?

n If bank base rates are 0.5 per cent why do you expect me to pay 8 per cent for an unsecured loan?

n How can this investment offer the same returns as the stock market without any risk of losses?

n Is it prudent to tie up the great bulk of my capital in my house?

n What are the chances of something going wrong, and if it does how much money could I lose?

These are the kind of questions that sceptical customers should ask, and the ones that professionals should answer.

l Gareth Howlett is fund manager director at Brooks Macdonald Asset Management.