Complaints trickling into FOS over frozen funds
The Financial Ombudsman Service has received about 50 complaints from investors in frozen managed investment funds, although only two or three are against financial planners.
Alison Maynard, from the investments, life insurance and superannuation arm of the Ombudsman, said most complaints are against the investment managers of a “variety of frozen funds”, although she said adviser complaints could increase.
The funds include some mortgage funds that froze redemptions in October last year as investors rushed to liquidate their holdings in the wake of the Federal Government’s pledge to guarantee bank deposits.
The Challenger Howard Mortgage Fund froze $2.8 billion of investor funds, one of the largest freezes, and there were also freezes by the East Coast Mortgage Trust, Northern Investment Trust Fund and Richmond Mortgage Fund.
Maynard said most complaints, which are “quite low historically” against managed investment funds, related to operation of the funds themselves.
“We’ve also had some consumer queries — although not many (actual) complaints — about the refusal of the funds to release funds on hardship grounds.
“This is partly because only some of the frozen funds have applied for an exemption from ASIC [Australian Securities and Investments Commission] to be able to release funds on hardship grounds.”
However, in time the FOS “would expect to get more complaints (against investment managers) about a failure to release funds on hardship grounds”, she said.
Complaints against advisers could also increase, “particularly if there are not any remedies against the investment managers themselves”.
“It is then that we might find investors start complaining about the advice (they received) to go into the funds, but so far that hasn’t happened,” she said.
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