It must have seemed Christmas had arrived early for the 6,500 Britannia Building Society savers who put their money into a fixed-rate bond linked to FTSE-100 index five years ago.

In July 1997, Labour had been in office for a matter of weeks and the London stock market stood at levels almost identical to today's.

Now Britannia points out that its bond, which matured this month, has paid a massive 50 per cent gross interest to savers who held firm.

The return was increased because the final-year reading is a year average, rather than one recorded in recent days as the market fell off a cliff.

A Britannia spokesman said: "A £10,000 investment will get £15,000 back. Anybody with a minimum £500 to invest should try the new Guaranteed Capital Equity Bond which promises a 38.25 per cent return if the FTSE-100 rises or stays the same in the next five years. If the FTSE falls, an investor will get his or her capital back."

If stock markets are plumbing unrealistic lows, with investors spooked by accounting scandals on Wall Street, The Britannia Bond could be a good bet. At worst, you lose nothing but the interest payments.

It shows private investors, with luck and judgement on their side but no great expertise from financial advisers, can make profitable investments, even in treacherous markets.

Moneyfacts magazine says a Britannia investor who put £10,000 in an instant access account back in 1997 would now have only £11,100.

The point is worth remembering because of the Sandler Report, led by former Lloyd's of London chief Ron Sandler, into the retail savings industry.

The report complained of widespread misselling, excessive fees and charges and poor quality advice and must have made many wonder if saving was really worth the bother.

Sandler called for a new range of simple financial products consumers could buy without needing regulated advice. These would be cheap, with a maximum annual charge of one per cent, and easy to understand.

It all sounds user-friendly until you reach his proposal to scrap the five per cent withdrawal rule on investment bonds.

This is currently used by tens of thousands of pensioners to raise income with regular lump sums on which income tax is deferred for years into the future.

Mark Dampier, of Hargreaves Lansdown, said this change, which is apparently needed to create a level playing field in financial products, could be almost a back-door way of getting rid of investment bonds.

Sandler also said financial advisers should stop living by commission charges and levy fees instead.

But with some fees topping £100 an hour, this would hardly help low-paid workers (and poorer savers) who are such a preoccupation of his report.

Many believe small firms of financial advisers could vanish if Sandler's proposals are adopted.

Kay Ingram, of Tenon Financial Services, said: "The reforms as outlined are likely to make truly independent advice the preserve of the very wealthy, leaving middle income groups at the mercy of banks and supermarkets."

So how do we get people to save more and plug a savings gap possibly running at £27 billion a year?

The proposals come as shares are crashing and the compensation bandwagon is up and running with the support of the Financial Services Authority (FSA).

Private sector pensions are in trouble, worsened by Chancellor Gordon Brown's unfortunately timed tax grab, and even safety-first, with profits bonds are under fire.

The savings ratio has more than halved to about four per cent since Labour came to power.

But better-paid workers, and especially working couples, are generating substantial sums in spare cash which would normally be invested.

How can savers hope to chart a course through these troubled waters?

David Hanratty, investment director of Nelson Money Managers, said: "The Sandler report does makes a useful point about asset allocation.

"The financial services industry channels people into flavour-of-the-month funds, like the technology boom two years ago, when a sensible blend of cash, bonds and equities is safer."

Mr Hanratty said his retired clients were 70 per cent invested in bonds and even younger clients chasing growth were cutting equity exposure, apart from in shares with steady yields like British American Tobacco and HSBC.

At Baronworth Investment Services, Colin Jackson said six-figure lump sums were coming out of shares and heading into Guaranteed Investment Bonds.

With a minimum £500, savers are guaranteed 4.9 per cent after basic rate tax and it may be easier to gauge financial prospects following the shortest two-year investment period.

Marc Gordon, of Close Fund Management, said its UK Escalator Fund, an authorised unit trust regulated by the FSA, fulfilled most of the Sandler criteria: 100 per cent protection of capital on a quarterly basis, easy access and the chance to lock in gains if the UK market turns upwards.

Richard Wastcoat, managing director of Fidelity Investments, refuted Sandler's view consumers were weak and lacked influence.

He said: "The opposite is true, our best-selling funds are consistently our best performers. Investors know where to find good long-term performance and companies which can be trusted."

So, despite the gloomy scenario and pension schemes looking weaker by the month, there is no need to despair about savings.