David Prosser's Outlook: Crombie's opportunity to leave his mark

Time is running out for Sandy Crombie, chief executive of Standard Life, to decide whether to table a bid for Resolution. Under Takeover Panel rules, Mr Crombie has until Thursday to add Standard's name to the suitors circling the insurer, which has already rebuffed two bids from Hugh Osmond's Pearl Group in favour of a nil-premium merger with Friends Provident.

At first sight, it looks an easy decision. A tie-up between Standard and Resolution makes strategic sense. It would create a £200bn asset management business and give Standard access to the distribution deals Resolution has with the Abbey banking group. Then there's Resolution's Scottish Provident unit, a neat fit with Standard's private healthcare interests.

Nor does Standard have to worry about Resolution's closed-end funds, a sector of the insurance world in which it has little interest. Any offer for Resolution would almost certainly be made in conjunction with Swiss Re, a much more natural home for the vulture fund business. Moreover, if Mr Crombie does decide to bid, he can be certain of a warmer welcome at Resolution than the one received by Pearl. Its second offer – of 691p, made last week – was swiftly rejected by Resolution, which made the rather obvious point that its shares were trading well in excess of this price. That Mr Osmond and Clive Cowdery, Resolution's chairman, are not on the best of terms adds a bit of spice to that exchange.

And yet, still, Mr Crombie is biding his time, indecision that has already cost Standard the chance to team up with Pearl, which instead turned to Royal London as its bidding partner for Resolution

Why the delay? The answer is that Mr Crombie is by no means sure he can make the numbers add up. Outbidding Pearl should be no problem, but securing a recommendation from Resolution may require a higher price than Standard is prepared to pay.

Bear Stearns analysts calculate that Resolution's merger with Friends Provident values Mr Cowdery's company at around 760p a share. Mr Crombie may not have to pay that much if he can convince Resolution of the strategic benefits of a Standard offer, but there is only so much wiggle room. Bear Stearns, for example, reckons any bid above 700p would be value-destructive for Standard.

Quite a dilemma, then. There is certainly no pressure from Standard's shareholders for acquisitions; its institutional investors are broadly supportive of the company's plans for organic growth, which are proceeding nicely thank you, and in any case, the insurer is more widely held than most by retail investors.

Still, the acquisition of Resolution might just be a neat way for Mr Crombie to bow out of Standard. A 40-year-plus veteran of the Edinburgh institution, he has steered Standard back from the brink after its disastrous collapse in the first few years of the 2000s. Last year's stock market flotation may have disappointed believers in the mutual story, but it was implemented without a hitch. A major takeover could be the final chapter, with Mr Crombie, now 58, handing over the reins once he has bedded Resolution down.

Tax breaks can be bad for savers

They had to try, but there was never any question of Alistair Darling bowing to business leaders' demands for a U-turn on CGT reform at yesterday's hastily convened meeting at the Treasury. The chancellor calculates – probably rightly – that his proposals are of relatively little interest to the general electorate and he needs the money they will raise in order to pay for a giveaway on inheritance tax, much more of a touchstone issue.

Still, the CGT row has at least raised again the fundamental question of the extent to which particular types of investment ought to be favoured with tax breaks. Encouraging long-term saving and asset-building with tax relief might seem a no-brainer, but it does not always lead to rational behaviour. Nowhere is this more true than with the annual individual savings account allowance, currently worth £7,000, and the personal equity plans that ISAs replaced in 1997. Leaving aside the issue of whether the billions poured into ISAs and PEPs really are new savings – there's plenty of evidence ISAs encourage investors to hold different type of assets rather than save more - the offer of an annual allowance has resulted in millions of people ending up with a disparate collection of investments that bear little relation to either their long-term financial objectives or their risk profile.

Rather than making sensible investment decisions based on such basics, ISA investors and their PEP predecessors are each year invited to take part in an unseemly scramble to use their allowances before the tax deadline passes. The ISA rush is a huge boon to fund managers promoting the latest fad – from the dot.com boom of the late nineties to last year's vogue for commercial property – but is of little help in encouraging responsible saving. People invest simply because they don't want to miss out.

Thanks to PEPs and ISAs, it is not uncommon to find households with no emergency savings at all in the building society, where no comparable relief is available. Instead, they have an eclectic range of small – and often loss-making holdings – in weird investment funds promoted heavily by the retail fund management industry. A bit of dot com here, say, and a bit of emerging markets there. Maybe even a bit of high-yield debt courtesy of a junk bond fund, just to spice things up a bit.

It's a million miles away from sensible portfolio planning, yet the Treasury has little choice but to stick with ISAs. Clobber the modest number of people selling small businesses, by all means, but don't mess with the mass market.

Nintendo takesthe high score

Another day, another price cut in the fiercely competitive games console market. Microsoft yesterday slashed the cost of the Xbox 360 by 13 per cent in Japan, following similar reductions from both it and rival Sony in the US and Europe. The two giants are desperate to recapture the initiative from Nintendo, whose Wii console is outselling the two combined by a margin of three to one.

What a comeback. As recently as three years ago, Microsoft and particularly Sony dominated the games console market, with Nintendo looking out of it. Now the tables have been turned.

Microsoft and Sony made the same fundamental error when launching, respectively, the Xbox 360 in 2005 and the PlayStation 3 last year. Both consoles are fabulous bits of kit, offering spectacular graphics and the sort of online experience that has encouraged hard-core gamers to indulge in stupendous feats of sleep deprivation while battling all-comers on Halo 3. However, there's only so many of those hard-core gamers out there - and for more casual players, both the Xbox and PS3 were over-specced and overpriced.

Nintendo, meanwhile, saw for the bigger picture. Technically, its significantly cheaper Wii console, launched in 2006, did not match its rivals. But it had far wider appeal – not only to people who have been playing computer games for years, but also in new markets. Controls that use motion sensors, for example, have converted young women – supposedly put off by nerdy little button-press handsets – to the joys of gaming.

The results have been spectacular. Thanks to further share price gains last week, Nintendo is now Japan's third largest company – it's worth 80 per cent more than Sony, even though the latter has overall group sales that are eight times higher.

That gap could widen in the run-up to Christmas, because even after its rivals' price cuts, Wii is still the market's top seller. Sony and Microsoft forgot the first rule of gaming – it's not game over until your opponent is dead.

d.prosser@independent.co.uk