David Prosser: The FSA's low opinion of those it regulates

The product chosen by the Financial Services Authority for its first attempt to offer providers guidance on design could not be more fitting. If only the regulator had been able to intervene in the market this way before payment protection insurance turned into a billion-pound mis-selling scandal.

Still, the sort of features the regulator said yesterday it would henceforth look for from PPI makes one wonder what it thinks about the financial services industry's ability to learn from its mistakes. The FSA is concerned about firms failing to identify the right type of customers for such insurance, that policies might not offer what customers need and that products can be so confusing, comparisons are impossible.

All sensible stuff, of course, but have financial services companies really sunk so low that they need to be specifically told to design their products with such basic issues in mind?