After a series of lengthy delays, the Commerce Commission has reached a $45 million settlement with ANZ National Bank over its promotion of failed ING funds.That's the largest financial settlement for the competition watchdog to date.ANZ will pay the $45
After a series of lengthy delays, the Commerce Commission has reached a $45 million settlement with ANZ National Bank over its promotion of failed ING funds.
That’s the largest financial settlement for the competition watchdog to date.
ANZ will pay the $45 million settlement on top of $500 million already available to 14,000 investors from its compensation offer last year.
Commerce Commission investigations centered around whether promotion, by ANZ and ING, of two frozen ING funds breached the Fair Trading Act by misrepresenting the degree of risk of the funds.
ING’s Diversified Yield and Regular Income funds were advertised as low or moderate risk, but contained investments in complex collateralised debt obligations (CDOs).
ING collected about $700 million from 14,000 investors before freezing the funds in March 2008 as the financial crisis began to bite. At their peak they were worth $850 million.
Today, the Commerce Commission said it had found the bank’s promotion of the degree of investment risk was “misleading” and that there was sufficient evidence to take proceedings against ANZ and ING for breaching the Fair Trading Act.
However, the commission had decided against this course of action, saying the settlement was the best outcome for investors in the funds.
ANZ National faced a maximum fine of $200,000 under the Fair Trading Act.
Commerce Commission chair Dr Mark Berry said it was important clear and accurate information was available to consumers, on which to make properly informed decisions.
“Investors decide where to invest their money based largely on their appetite for risk. Throughout our investigation, investors have told us that they would not have invested in these funds if the actual risk had been represented accurately.”
The Commission will work with ANZ and ING to determine the amount and process for payments to investors from the $45 million fund.
Not all ING investors will receive a payment under the settlement – only those who had money in the funds at the date of suspension.
The target date for payment is within five months – around mid to late November.
ANZ National Bank acting chief executive Steven Fyfe said the bank agreed the compensation was in the best interests of investors to avoid a lengthy court process.
“We apologise to those investors who felt we had misinformed them. Our priority has always been to assist investors, which is why we made available more than $500 million before this settlement. Investments for many New Zealanders have been affected by the global financial crisis, but few financial institutions have stood by their customers to this extent,” he said.
The Commerce Commission said the investigations were now complete and it would not be taking any legal action against individual advisers, or other parties arising out of the investigation.
