The business - Patrick Hosking argues Brown is right on pensions

Tax relief on pension savings is meant to encourage middle earners to set aside enough so that they

The debate over the Treasury's proposed pension reforms has centred almost entirely on the Chancellor's plans for a £1.4m lifetime limit on tax relief on pension savings. People would then start to pay tax. The row over the cap may be partly a personality thing. Tony Blair apparently

wanted the reform watered down. Gordon

Brown did not and appears to have won.

But the volume of moaning about the cap reflects the disproportionate influence of the well-off. The CBI, David Willetts - the shadow pensions minister - and several large employers, not to mention most newspapers, have all attacked the limit. But the row is utterly irrelevant to most people, who will never get anywhere near accumulating such a lavish pension pot. And for those it does affect, the difference will be marginal.

Depending on who you believe, the proposal will hurt as few as 5,000 people (the Treasury) or as many as 600,000 (the actuaries, Mercer). Those who oppose the move mutter about the politics of envy, but putting a limit on tax relief does not seem unreasonable. This relief is surely about encouraging middle earners to set aside enough not to be a burden on the state. It is not intended as a tax-avoidance device for the very well-off.

Even with annuity rates at current rock-bottom levels, £1.4m is enough to buy an income for life of £70,000 per year or more. Should anyone be rewarded with a tax perk to save more? The real interest in these reforms comes lower down the income scale. The simplified system will pay out bigger lump sums for many. And it will allow people to save in private pensions at the same time as they save in employer-based schemes - something the current rules make almost impossible. Yes, the wealthy will have a tax perk withdrawn. But for many more, the reforms could make them better off. Even the argument that senior executives will simply axe final-salary schemes for all employees if they see their own benefits eroded doesn't hold water. Most blue-chip company directors are already in separate schemes from junior staff.

Belatedly, the Financial Services Authority is looking at whether the UK's £225bn unit trust industry has been a victim of the same disgraceful abuses that are rocking the mutual funds in America. In a nutshell, mutual funds have been found guilty of doing favours for professionals at the expense of ordinary small investors. Callum McCarthy, the FSA chairman, has told the Financial Times that the authority is investigating more fully after an initial inquiry "emphatically" suggested a closer examination was necessary.

This is a dramatic difference in attitude from two months ago when the US scandal first broke. When I spoke to officials then, their attitude, as I reported in the NS at the time, was that it was "highly unlikely" anything similar could happen here. How could anything possibly be wrong? If a scam is uncovered on Wall Street, it seems reasonable to entertain the notion that something similar could happen in the world's second-biggest financial centre, too. Yet the FSA's initial reaction in these cases (it was the same with the biased investment advice scandal) is denial.

This ostrich-like approach may have something to do with its duty to maintain public confidence in the financial system. It doesn't want to spark unnecessary anxiety. But I'm afraid it ends up looking sleepy and reactive. Oh, for a regulator with the appetite, curiosity and gumption to go after bad smells even before they start smelling bad.

One of the blessings of the downturn in the City over the past couple of years has been that the big securities houses haven't been recruiting so aggressively. Other employers - perhaps more interested in creating wealth rather than merely shuffling it about - have stood more of a chance of snapping up the brightest graduates.

That lull may be over. Morgan Stanley, Goldman Sachs, Lehman Brothers and Merrill Lynch are back hiring, offering starting pay of at least £35,000.

The pound signs luring our smartest students into the City are more enticing than ever. No longer do they expect mere seven-figure bonuses if they reach the top. The most successful City traders use their bonuses as seed money for more ambitious projects, notably hedge funds. These are the secretive firms that ply their trade from offices in Mayfair, while making jolly sure they are located, for tax and regulatory purposes, rather further away - the Cayman Islands, for instance. For them remuneration can be unlimited.

Two ex-J P Morgan currency traders who three years ago set up their own business in London, BlueCrest, were forced to lift the veil fleetingly on their affairs the other day. Three years after setting up with a few million pounds, they are now personally worth £420m.

Patrick Hosking is deputy City editor of the London Evening Standard