Of course the Treasury is boxing clever on this. It also says Scotland would have to put in a complex system of financial regulation. But as we have asked before, in a smaller market, where it is might arguably be easier to supervise would Scotland adopt such a strong pro-consumerist line or such a hard line on remuneration? A Scottish government would not be anti-consumer. But it might have a different interpretation about where that line is drawn when it comes to encouraging saving particularly if it could keep a closer eye on what was happening in the market. It also might have a different view of restricting full advice to better off parts of the population if it looked at the issue with a more Scottish and more social democratic eye.

Here is the pertinent quote.

Andy Millmore, a partner at Harbottle & Lewis (www.harbottle.com)  says: “What is significant is that this leads to the question of why they did not understand, and whether they were mis-sold, with the strong possibility that many will believe that they were”.

“The problem in the past has been the cost of taking lenders and intermediaries to court. But since last month, solicitors can undertake work on a true contingency basis, sharing in recoveries, which makes the prospect of legal action more likely in my view if groups of borrowers were affected in the same circumstances.”

“This report suggests that interest-only loans could represent a similar issue to payment protection mis-selling, with the potential to secure very significant pay-outs.”

“In turn that could lead to criticisms of claims companies and lawyers if it is seen as a further example of the excesses of the compensation culture.”

Is this a bit of a legal hop, skip and a jump? (Watch out in case the old horse-hair syrup falls off!)

The FCA paper said 13 per cent did not understand that they would have to pay off a capital sum at the point of sale and another 6 per cent were unsure. However, only 2.5 per cent were both not aware at point of sale and currently do not have a repayment strategy in place.

So the borrowers found out somehow. Perhaps that world famous bloke down the Dog and Duck, who also reentered British political debate this week, offered the relevant advice.

Of course, there is also talk that alongside class actions, claims chasers are also sharpening their claims chasing knives or at least considering changing the message on their ‘orrible little automatic dialing machines.

But one thing to watch out for is whether after a campaign of class actions and people being prompted to (mis?)remember misselling, the numbers who don’t think they understood jump significantly higher.

And if they do what are we to make of it?

If this one gets up a head of steam and lenders and advisers start having to pay out, the Money Debate suggests we would be getting near to a zero fail regime whatever the regulator says is the case.

P.S. Been a little remiss about this. But thanks very much to all who nominated the Money Debate for financial blog of the year at the Headline Money awards this year. Our staff were unfortunately all struck down with a bug so couldn’t accept the kind offer of seat at the awards from the AIC this year. (We are not sure how all twenty of us we’re going to fit on one seat) Anyway in the 20th biggest shock of the night, we didn’t win this year with Investors Chronicle coming second and the Telegraph coming first. Congratulations media leviathans! But remember social media tankers find it very hard to change course. (Nope, we’re not sure what that means either.) However we’re feeling better and there’s always next year! (cue megalomaniac laughter).

Is there now a chance it could become irrelevant for something that is much more than a debate but also a public advice challenge – the interest only mortgages shortfalls facing 1.3 million borrowers. It is certainly a significant litmus test.

Of course, the issue can be overblown. While there is not necessarily a need to panic, there is a need for advice. But any consideration of the various options – moving to repayment, creating a savings and investment plan, down-sizing – would be better done with financial advice than without.

However the dynamics of the market may not lend themselves to allowing advisers to do much about it. In a world with more flexible regulations, advisers might set up bespoke workshops to help people consider their options. With more flexible regulations, mutual funds or even structured product providers might even hold out their investment products as a means to build enough money to bridge the gap. But with the endowment crisis complete with ‘shortfalls’ that led to complaints about advisers, there is very little chance any investment firm would risk their reputation even if the regulations allowed.

That strikes the Money Debate as a little odd, because taking a little bit of stock market risk, or even, with a structured product, some counterparty risk, might point to a way out for some slightly braver borrowers. That is bad news for society and perhaps bad news for advisers too.  But the big challenge must be regulators. If our advice infrastructure can’t help with this issue then what is it and all the related rules and regulations for?

1.3 million interest-only mortgage borrowers may be facing a shortfall when they come to pay off the capital sum.The average gap may be around £70,000.

Now the interest only mortgage issue isn’t a scandal nor even a crisis yet. But it is a big concern particularly in parts of the North where prices have fallen a lot and property downsizing options are very limited.

All things being equal, one might suggest the best way to deal with this would be to direct as many of these borrowers to proper advisers. Unbiased.co.uk is doing valiant work to do just that. But will there be enough advisers? Twenty thousand advisers – makes about 65 shortfall sufferers for each one and doing the day job. That just doesn’t sound like enough to me.

Look a real problem for real people and a real advice gap.

Could proper advisers could get together, devise a simple suite that meets people’s needs, make some suggestion for how the advice might work, and then challenge the regulator and policymakers to devise a regulatory regime around it, that was not too expensive and not too draconian. It couldn’t be fail safe. That would need a Government  guarantee. But it might take the debate on a little further.

Both are big news of course especially the reduced minimum which could be a game changer. If HL can make it work maybe others can too. It is certainly the first time I have heard that the advice gap might just have narrowed a little. It seems to be driven by the fact that some people simply won’t self select.

The second issue on transfers is very interesting too. HL may be the biggest consumer platform, but platforms together are starting to become a very significant lobbying group (well when they are not arguing with each other). I think the pressure may be on insurers’ back books in a way they underestimate though of course they would lobby forcefully against any change. Gorham’s arguments about competition not working are difficult to refute, particularly if you look at the issue from the point of view of the individual consumer, policyholder and investor. The insurers’ riposte will, of course, be about how those books must be managed collectively to make sure all policyholders are looked after and to maintain the integrity of their business in those policyholders’ interests. True, up to a point, but perhaps less true than it was in the past. The engine of the insurer is much less likely to be a with-profits life fund or three these days. Big life funds do sit beneath the closed life offices, of course, but Gorham singled out some of their practices for criticism for example suggesting wet signature requirements were obstructionism rather than any real concern for the customers’ interest. It wouldn’t hurt to test closed life offices’ assumptions about transfer penalties from time to time even if a big regulatory intervention isn’t on the horizon yet. The OFT examination of workplace pensions might even help Hargreaves case if it looks at reasons why money can’t move around.

Listening to the national journalists’ questions, almost all seemed to be focused on the future pricing policy, except where they were interrogating the make up of the Wealth 150 and those questions had a price element too. This is a perfectly legitimate line of questioning. But the occasional question about how we might increase the overall numbers of people investing might not go amiss.

Gorham’s view is that is that the key is pension policy. He pointed out that it was one significant difference with the US and Sweden for example, and he has hopes for auto-enrolment. But the Isa figures are striking. While HL has grown Isa share significantly, the numbers investing have dropped. In 1999/2000 4.57million people applied to invest in stocks and shares Peps/Isas. In 2011/2012 there were 2.9m applications -  a fall of 36 per cent. That feels like an Isa crisis and surely they can’t all be refugees from the TMT bubble? It might be good if national newspaper journalists asked why more people don’t have the confidence to invest. People like Mr Gorham may well have some of the answers.

It looks like the concession which got the plans through Parliament was a promise that the employees concerned would have access to free, independent legal advice.

Not being a lawyer, I still wonder what this legal advice would be. Like this – the law says you can do this. (Well unless there is a constitutional clash with other laws, in which case employees will need to seek the advice of the Supreme Court.)

Surely it should have been financial advice. As in… Well it is quite difficult to put a value on those employment and redundancy rights, but they certainly have some value in protecting your income a little.

This is compared with a shareholding in your firm which does, to an extent, double up your potential liability. They could be worth quite a bit, but if the firm folds then you lose your job and your shares.

The Money Debate isn’t suggesting that IFAs would be falling over themselves to offer advice on a very tricky area, but surely it should have been independent financial advice, if any advice at all was to be required.

For example, UK journalists could question the lending policies or the market share. I did. No really. Many journalists did. Well we asked, but did we arm ourselves with the correct financial information beyond the blunt “What about the fact you have almost a third of the mortgage market?” Tricky you see, when institutions are so vast.

“Well, HBOS would  say, we are managing that market share down a little bit, prudently of course. We are now building our share of investments and savings to our natural market share.” Blah. Blah. Etc.

So could we find experts to help – experts who understood mortgage funding and the quality of mortgage backed securities. You see we were told about that too but it was tricky to write. Some very small sub prime lenders were protesting the strength of their mortgage books days before they crashed, sometimes even after tranche one had hit the rocks, they were still protesting about how tranche two was different. Indeed, some journalists warned about overheating in the institutional market. But really was it anyone’s main business? Did any paper run stories on the front page? Actually I do recall Abbey getting a front page pasting for its lending policies but not HBOS though I could stand corrected on that. And imagine if any title had written even one tenth of what said by the Banking Standards Commission in its report today in a newspaper or magazine. Guess what. They would have published and been damned. Utterly damned. (Something Lord Leveson possibly missed while he was listening to Hugh Grant. Oh well.)

So journalism probably can’t catch this sort of thing. Not even outstanding journalists like Gillian Tett or Robert Peston. So it’s up to regulators or the market. Oh dear.