Moves to allow access to funds applauded

The peak funds body welcomed moves to allow investors facing hardship access to some frozen funds but urged patience while working through the process of getting liquidity back into the funds.

Investment and Financial Services Association chief executive Richard Gilbert said the move by the Australian Securities and Investments Commission (ASIC) was a fair decision in allowing access to $20,000 per member, plus half their remaining balance.

"It's a welcome decision. ASIC has done an excellent job in reviewing its law and looking at how it can help these investors," he said.
"Our industry looks forward to cooperating with ASIC so those in hardship can actually receive some money."

Funds imposed the freeze last month after significant withdrawals by investors concerned that their money was not protected under the federal government's unlimited bank deposit guarantee.

Mr Gilbert said funds remained low on cash flow. "This is a matter of a joint approach on how we get liquidity into these funds.
Overwhelmingly there is no capital lost," he said. "We just have to be patient as we work through this process." Under the guidelines announced on Thursday night by ASIC, access to funds will be
considered on a case by case basis for demonstrated hardship such as pressing
medical or funeral costs or to prevent foreclosure.
ASIC chairman Tony D'Aloisio said the freeze had been a prudent measure by trustees
to better protect all investors.
"In allowing earlier access to some members and not to others, ASIC has balanced
hardship against the interests of other members," he said in a statement.
Treasurer Wayne Swan said this was a welcome move.
"We shouldn't forget that whilst capital is frozen, there are still many people who
are receiving an income," he told reporters.
Mr Swan said hardship rules would be strict and apply to people who had found it
hard to access capital.
"I'm pleased that ASIC have been able to take this decision and to implement it with
a certain benefit to those people who are facing hardship," he said.
But Opposition Leader Malcolm Turnbull said this remained a problem of the
government's own making.
He said around the world bank deposit guarantees were of the order of 50,000 euros
($A96,000) in Europe, STG50,000 ($A120,000) in the UK and $US100,000 ($A150,000) in
the US.
"But Mr Rudd decided that that wasn't good enough. Again he wanted the grand
gesture, the big political hit," he told the NSW Liberals state council.
"And what has been the result? He has made a serious financial crisis much worse.
There are hundreds of thousands of Australians whose life savings in cash-management
trusts and mortgage funds have been frozen and they can't get access to them."
The government's scheme making it easier for dissatisfied bank customers to switch
to another institution came into effect.
But independent senator Nick Xenophon said this was all be a bit of a tease if
customers were barred from moving by restrictive contracts.
He said telling people they could switch banks was also not much good if Mr Swan
kept reducing choice by approving more bank mergers.
"It's all well and good to give consumers more information but unless you can give
them additional powers in terms of reforming the law on unfair contract, it's going
to be a bit of a tease for consumers," he said.