The Bells Ring for ANZ/ING

Monday the 13th of July was the final date for acceptances of the ING offer for their two beleaguered funds, the ING Diversified Yield Fund and the ING Regular Income Fund. Around 95% of investors accepted the offer, and the majority of these have also opted for the money to go into the high interest earning special ANZ Bank cash account.

The 5% of investors who did not accept the offer appear to have really missed the boat. Some of these people no doubt are overseas and simply did not receive the settlement documents in time.

Also at the last minute were calls by Peter Dunne and Lianne Dalziel for ING to be a good corporate citizen and waive the indemnity clause on the settlement documents that were designed to prevent legal action being taken by investors against ING, ANZ and others.

The ANZ Bank to their credit is allowing investors who invested via the ANZ Bank to make claims against them. They have produced a document named the “Safety valve notice form” that needs to be completed by those investors. If any readers would like this form, please do not hesitate to contact us. We assume that the ANZ Wealth Advisers can also provide the same form.

Over the past few weeks we have heard from a number of investors who had these products. For all these people it has been a heart breaking experience. None of them were do it yourself investors who put disproportionate amounts of their wealth into for example finance companies based on advertisements in the Sunday papers. These people all invested via investment advisers and most were ANZ Wealth Advisers. The sums involved were not insignificant. They ranged from $100,000 to $600,000. No doubt there are other people suffering whom we have not heard about, and it would not be surprising if the sums involved are even higher than what we have already mentioned. To those who invested via the ANZ Bank, it is not too late to make a claim, but you will need to act promptly as the claim forms must be received by the end of July. You should also seek assistance to help you in the claims process.

Lianne Dalziel has indicated that she is prepared to put forward a private member’s bill in order to retrospectively override the indemnity clauses on the ING offer documents. With the comments that Peter Dunne has made as a constituent MP, rather than in his Minister of Revenue role, it will be interesting to see if anything eventuates. Retrospective legislation is not normally considered to be “politically correct”. It has been successfully used to amend legislation when anomalies have been found.

While indemnities are normal practice when there are legal settlements, this one in our opinion goes too far, effectively providing protection for the minority of advisers who used disproportionate amounts of the problem products within the portfolios they advised on. A 5 – 10% exposure in a portfolio may have been acceptable, but we are seeing 30 – 100% exposures. ING in their adviser road shows in 2006 showed that the average credit rating of the underlying investments in the two troubled funds was only BBB. This implies that half the underlying investments at that time were rated as junk. Unfortunately since those road shows, they took in over $200M of new money, much of it coming from their ANZ distribution channel. Doesn’t it seem strange that bank advisers would recommend these sorts of investments when the money was often coming out of the safety of their own bank deposits for largely conservative investors when this information should have been known to the advisers and disclosed to potential investors!