It has been another bad week for Equitable Life with-profits policyholders.

After an uncertain future since the life insurer closed for new business in December, investors have now been told that they will lose up to 16% from their pension funds.

While those customers must now decide what they should do - the debacle has wider ramifications both for the financial services industry and for consumers as a whole.

Equitable was an 'establishment' institution within the financial services industry.

Founded in 1762, it has a long and prestigious heritage and was known as a solid, "safe pair of hands".

But if investors are not sure if they can trust Equitable anymore, who can they?

Your rights

The financial services industry has been tainted by a succession of scandals over the last few years - from endowment mortgages to pensions misselling.

Entrusting your future financial well-being to a company, even if they are a well known brand, may now seem a daunting prospect.

This is made worse because financial products can be confusing and complicated. They are often littered with small print and jargon.

"Make sure you understand the investment before you sign - don't let someone fob you off," says Anna Bowes of Chase de Vere, an independent financial adviser.

Here is a simple guide to some of the most common ways people are caught out and how to avoid them.

Check the small print

Watch out for words such as 'guaranteed' or 'fixed rate', these can mean the opposite.

Anyone buying a product must look into its finer details -there can be some nasty surprises lurking beneath the big headlines.

Ask questions

If you do not understand the policy speak to someone who does. There is an increasing array of publications and websites dealing with personal finance - it is now much easier to access information.

Too good to be true?

Remember that investments can go down as well as up.

For example, if you are putting money into an equity-based investment, the performance will be linked to the whims of the stock market and you should make allowances for any downturn in the market.

Past performance

Companies frequently advertise their investments with past performance figures, but how the fund has performed over the last few years may not be a guide to its success in the future.

Check that the fund has performed consistently well, say over the last five years, and it is likely to do well in the future. For example, it is in a good sector and has plenty of money in it to ride out any storm.

If it is an actively-managed fund, find out who is managing the fund. Some companies advertise their products with old past performance figures even when a star fund manager has left.

Avoid hidden charges

Products can be littered with hidden charges.

Redemption penalties are one of the easiest ways mortgage holders are caught out. They lock you into a poor rate after a special deal has expired.

Similarly with a stock market fund, such as a unit trust, there may be exit penalties if you want to transfer your fund to a different provider.

Diversify your investments

Independent financial advisers recommend people to invest in a range of products and sectors to spread investment risk

Save some cash

Do not put all your money into property or so-called illiquid assets. You may need some cash instantly - if all your money is in property it will be difficult to sell up in time to pay your debtors.

Ensure that the company is protected

If the company is a member of a trade association or regulated by an authority you are more likely to be able to seek recourse if all goes wrong.

Alternatively, if you sign up for an insurance policy which is covered by the Policyholders Protection Act, you may get 90% of your investment back if the company folds.

Check your annual statements

If you have a policy with a mutual insurer, you should receive an annual statement which should outline the state of your investment. You should also receive details of the overall fund's value.

The company's annual accounts will give you an idea about the company's health, and you should ask if you are at all concerned or cannot understand. If it is a good company, they will take time to explain.