By Tom McPhail
Tom McPhail, Hargreaves Lansdown
Standard Life has announced it will be compensating nearly 100,000 of its investors for losses they suffered in its Pension Sterling fund.
The news comes after several weeks of concerted pressure from investors and their advisers.
They had argued that they had been misled into believing the Standard Life fund to be more secure than it actually was.
For its part, Standard had argued that its marketing brochures made clear that the fund could fall in value.
The compensation announcement and accompanying apology amounts to a welcome U-turn and a rare case of a big investment institution putting the interests of its clients ahead of its shareholders.
So what can we learn from the experience?
Firstly, there is a very clear message for investment institutions such as insurance companies and investment fund managers.
Financial products must pass the Ronseal test; in other words they must do what they say on the tin.
If, as in the case of Standard Life's Pension Sterling Fund, you tell investors that the fund is invested in cash, then that is what you need to do.
If you subsequently change your investment mix - as Standard Life did, gradually increasing their exposure to mortgage-backed securities - then you need to tell people about it.
That way, if they decide that they do not like the direction you are going in, then they have a chance to step off the bus before it gets on to the motorway.
Risk and return
Following on from this, I think that there is also a question about why investors go into a money market fund in the first place.
For a lot of investors the reason they are there is because they do not want to take any risk - for example, because they are coming up to retirement.
If that is the case then there does not seem to be much point in taking any risk with their capital, just to squeeze an extra half a per cent of investment return out of the market.
The definition of money market funds is fairly broad.
It currently encompasses funds that are pretty much wholly invested in cash, through to funds that pursue an aggressive strategy of maximising returns through exposure to asset-backed securities.
I think that this is a relevant moment to ask the trade bodies that are responsible for setting these definitions to revise them.
The Association of British Insurers and the Investment Managers Association should consider making a distinction between these different types of money market funds.
I think that there is a strong case for a "cash" sector where the over-riding priority is capital preservation.
Alongside the need for clear, fair and not misleading product information from financial institutions, there is a similar onus on financial advisers to be up front with their clients and to take responsibility for the advice that they give.
The Financial Services Authority has moved in recent years to what it calls a "principles based" regulatory system, a key element of which is treating customers fairly.
This surprisingly effective concept stems from the "if it walks like a duck, and quacks like a duck then it probably is a duck" school of thought.
In this context, if you put out a brochure selling customers one thing, and then you do something else, then you almost certainly are not treating them fairly.
So where does all this leave investors?
Well, notwithstanding the importance of the investment and savings industry playing fair with their customers, there is still an element of "buyer beware".
It is very easy to take reckless risks or to make injudicious investments, without it necessarily being the fault of the investment company, or even your adviser.
There is no substitute for taking a close and ongoing interest in what is happening with your savings and investments.
With the ongoing demise of company pension schemes and the government taking on more and more debt, it is up to everyone to take individual responsibility for their own financial future.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.