ASIC Eases Withdrawal Restrictions For Mortgage Fund Investors

Post by NeilMc on August 18, 2009 · Under Australian Economy, Business News, investments · Comment

The Australian Securities & Investment Commission (ASIC) has given mortgage fund investors facing financial difficulties the ability to withdraw as much as $100,000 a year from their accounts, providing relief to investors facing financial hardship who previously were barred by the regulator from accessing their funds.

On Monday, ASIC announced that it will allow exemptions to the Corporations Act, and enable investors in financial need, to have access to funds which were previously frozen. Investors that would be exempted include the beneficiaries of estates of the deceased, and the long term unemployed.

Until Monday, investors in frozen mortgage funds could only obtain $20,000 in capital and half the outstanding interest in a one off payment, which had to be pre approved by the regulator first, with no discretion given to the fund managers.

The new rules allow for investors to have access to $100,000 of their capital over four payments during a 12 month period.

A spokesman for the $2.8billion Challenger fund, on Monday lauded the new rules .

“Once approved, hardship payments could be made in as soon as seven days,” the spokesman said.

He said the changes, applied for by the affected funds, had been necessary to battle the “continued unintended consequences of the retail bank deposit guarantee”.

ASIC Commissioner, Greg Medcraft is said to have fast tracked the changes and said on Monday, that the new rules were necessary to cover “special situations”.

“We have expanded hardship relief to pick up special situations where the industry considers that further discretion for relief is needed,” Mr Medcraft said.

The mortgage fund industry was thrown into chaos last October when the federal government’s retail bank guarantee sparked fears investors would flee the funds for the safety of the banks.

Compare Australian Credit Card Deals