This is a big wake-up call, says boss of Hargreaves Lansdown

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Hargreaves Lansdown welcomed Standard Life's decision to pay compensation to investors in its Pension Sterling Fund, which it had marketed as a cash fund when it held risky investments, but called it a big wake-up call to the industry.

The company, which has 300,000 active clients, had complained to the Financial Services Authority after it was dissatisfied by Standard Life's response to its complaints.

Chief executive Peter Hargreaves said: "Product providers have got away for far too long with producing crap products which didn't do what they said on the tin. Then it was we the retailers who got sued. If you bought a can of baked beans in a supermarket and discovered a worm in it when you opened it, you sue the manufacturer not the supermarket."

He said Standard Life had reacted correctly in the end and "probably come up with the right amount of compensation". He added: "We have seen too much of this in our industry. Split-capital investment trusts, precipice funds and most recently AIG's cash funds and almost everyone has got away with it. What today says is that if you're producing crap products, we'll come and smack you."

Hargreaves said his firm had written to every investment company that produces money funds to ask them to specifically state if their investments are as good as cash. He added: "We will publish all the lists, particularly those people who fail to respond to us.

"During recent market conditions we've seen a lot of our competitors effectively disappear because they are too scared to talk to their clients. Not only are new people still coming to us but existing clients are putting more of their money with us."

Hargreaves Lansdown's operating profits rose 28% to £34.9 million in the six months to end-December. Assets under administration fell 11%, far less than the FTSE All-Share index's 23% drop.