excessive short-term profit maximisation to the detriment of the long-term viability of the business. In this context tougher liability rules are also necessary to act as a deterrent to high­risk destabilising decisions. If variable payment systems are retained, multi-period bonus structures are needed. 2.5 Consumer protection: What is necessary and appropriate? The German government has already extended the period of limitation for claims for negligent advice and from 1 January 2010 introduced a comprehensive obligation to record investment counselling and discussions concerning financial instruments as well as – under certain circumstances – a right of revocation following advice given by telephone. It should not be forgotten, however, that tighter regulation does not automatically induce better investor protection. Indeed, too many regulations or hindrances can lead to a situation, where simply less advice is offered and investors are left to fend for themselves. In any case, regulations that ostensibly serve consumer protection but are not in fact welcomed by investors should be avoided, for example audio recording of meetings. Instead, individual fields where further action would be useful should be identified, and existing loopholes in regulation and supervision need to be located and closed: • To protect investors, fundamentally comparable and appropriate rules should apply to all market participants, in tandem with effective supervision. This applies in particular to the vendors of financial products. Improved qualification requirements should be set to ensure uniform standards and regular updating of knowledge. There are also considerable deficits in investor protection in the“grey market”, which needs to be placed under tighter regulation and supervision. Regulations that fail to serve their purpose should be withdrawn. • Prudent investment advice means putting the customer’s economic circumstances, investment goals and risk preferences first. Any recommendation must correspond with the customer’s interests. Sales pressure or incentives to sell particular products must not be allowed to lead to short-term profit targets being given priority over the investor’s interests. Here there are already legal provisions in place, but their effectiveness needs to be reviewed. • Even if the opportunities and risks of the investment are by nature borne by the investor, investment advisors must ensure that the investor is able to make a decision on a well-informed basis. Here there is room for improvement. Both the banks and their customers complain about the mountains of paper the banks have to issue; this is a consequence of the recently implemented reforms. Information for investors should focus on being brief, comprehensible and to the point rather than complete and comprehensive. Here it could be useful to create a European standard for summaries for particular product groups. • Another task for politics and the banking sector is to improve citizens’ financial literacy. 6