Who's protecting the henhouse? If the CommInsure events show us anything, it's that we're indebted to the services of the ABC and Fairfax for holding CBA to account. There is plenty of evidence to say there should be tighter – rather than relaxed – regulations covering this industry (of which, for the record, I and my employer are a part). It feels like ancient history now, but it was only 15 months or so ago that we were fighting the rollback of consumer protections. The banks, financial planning associations and assorted other vested interests were telling anyone who'd listen that the sky would fall in unless those changes were made. Happily, the Senate blocked the watering down of those consumer protections, and last I checked, the sky was still securely over our heads. Those predictions of doom were completely without foundation, surprising exactly no one. It was yet another case of the vested interests using scare campaigns in an attempt to derail reasonable consumer protections.

The financial services sector is perhaps the clearest example of pure capitalism in Australia today. And as someone who thinks we owe a very large debt to democratic capitalism, that leaves me in a difficult position. Well, not really. Free markets are wonderful in theory. But insufficiently regulated "free" markets are a disaster when there's a significant power or informational imbalance between the participants. Like, say, in the financial services industry. The financial services sector has – with a few, notable, exceptions – organised itself around a single goal: to extract as much money as possible from as many of us as possible as often as possible. Whose bread I eat, his song I sing And with a mix of financial illiteracy, deliberate obfuscation and some slick sales skills, it's an obscenely profitable endeavour.

Did you know, for example, that your insurance broker (probably your financial planner) can get a commission of more than the first year's entire premium for insurance policies they convince you to buy? Or that the "brands" that your financial planner works for get paid depending on how many of a company's product they sell you? Oh, the planner themselves can no longer get a commission, but that doesn't stop their employer getting a nice little earn-out from the products the planners recommend. They'll tell you that it's a coincidence that the products they recommend are higher-fee options than you could get elsewhere, of course. It's just the same coincidence time after time, in offices right around the country. Or your "full service" stockbroker who's always got something you should buy and sell. Those commissions generated by such activity will pay for the broker's holiday. They might – might – also be in your best interest. And those "discount" online brokers are a much better deal, but they're doing their darnedest to get you to trade more often, too. You think that's because they're trying to make you rich? Articles like these always prompt an indignant response from those on whom I've shone the spotlight. Yet not one correspondent ever acknowledges that the system is irrevocably broken, merely that either there are bad apples or "how else do you expect me to make a living?"

Tell that to the pensioner paying $5000 per year for cookie-cutter advice and high-fee investment options. Or to the person who was sold expensive and unnecessary insurance. Or to the bank customer who has a teller offer them a financial planning consultation. And to the three out of four managed-fund investors who lose to the market over the medium and long term. Yes, there are decent stockbrokers, insurance brokers and financial planners out there. And they have the potential to do a whole lot of good for their customers. But the rest – the bulk of them – are taking your money on what are arguably false pretences. Put simply, most of us would be better off without them – no matter what their lobbyists and chief executives say. Foolish takeaway Democratic capitalism works by matching those with needs and those with the ability to meet those needs. But it becomes bastardised when it more closely resembles a racket designed to let those with knowledge and power take advantage of those with neither. CBA needs to make things right in its insurance arm. But there's something rotten in the state of Denmark, and it's deeper, wider and more rotten than a single bank and its insurance business. Prime Minister Malcolm Turnbull, Treasurer Scott Morrison and Assistant Treasurer Kelly O'Dwyer​ have the power to fix the problems – but do they have the will?

New report: Forget BHP and Woolworths. These 3 "new breed" top blue chips for 2016 pay fully franked dividends and offer the very real prospect of significant capital appreciation. Click here to learn more. Scott Phillips is a Motley Fool investment adviser. You can follow Scott on Twitter @TMFScottP. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). NOW READ: How to rate your life insurance policy