Transparency needed around ANZ-ING claims, support group says (Update 1)

A group supporting investors in ING's frozen funds has called for more transparency around the settlement of claims against ANZ so investors can better decide whether to accept a reduced repayment offer, or hold out for further legal action. (Update 1 includes ANZ National response.) A "quick and limited" survey of 62 investors who lodged claims with ANZ has found that 24% were repaid between 91% and 107% of their lost capital. However, 42% of claims were rejected by ANZ, while the remaining 34% of claimants received between 61% and 90% of their lost capital back. ANZ and ING put a final offer to investors in the frozen Diversified Yield Fund (DYF) and Regular Income Fund in May, giving them the opportunity to receive around 60% of their investments in the funds back.

However, a condition of that acceptance was that investors would not be able to benefit from future rulings on the funds by New Zealand courts or the Commerce Commission. An exception was made for up to 2,700 investors who were advised by ANZ advisers to invest in the funds, although ANZ has "refused to disclose numbers, criteria or percentages regarding the outcome of the process," the Frozen Funds Group said. Concerns were also raised as to why ANZ had chosen to return different amounts to different claimants. "ANZ letters (to investors) do not specify any detail as to why ANZ deems an individual customer meets wholly, partially or not at all any of the criteria for compensation. ANZ also does not indicate which "“ if any "“ criteria may weigh more than others. In short, an ANZ customer is merely told the outcome of ANZ's assessment and further left in the dark," the group said. Over 95% of investors accepted ANZ's 60-62 cent offer for the funds, meaning they would not benefit from further legal rulings against the bank. ANZ financial advisors had told a number of the funds' investors that they were low risk. ANZ owned 49% of ING New Zealand's assets at the time, although it recently acquired full ownership. "It is not known how many ANZ customers filed a complaint. Educated guesses suggest a number between 1,300 and 1,600 of the potential 2,700," the Group said. "Early September, ANZ Private Banking wrote complainants they could expected a response by 'early October'. It only managed to send out the first responses on 6 November. We have reliable information that ANZ manages to send out between 40-80 letters per day and that about 800 customers have received a response from ANZ at this moment in time (24 November 2009)," it said. "ANZ has refused to disclose numbers, criteria or percentages regarding the outcome of the process. ANZ claims it is making an "individual, case-by-case" assessment of each complaint. However, the National Frozen Funds Group believes each ANZ customers would be greatly helped in deciding whether or not to accept any ANZ offer of compensation if there was transparency and he or she knew what ANZ had decided to offer to other customers." "First, the quick and limited survey suggests that ANZ accepts a full or partial responsibility for inappropriate advice to more than half their customers." "Second, while ANZ did accept that its financial advisers had failed their customers in more than half the cases, ANZ did not assume the full responsibility for this. Our survey shows that ANZ offers of additional compensation vary widely. Some people were offered a compensation of only an additional 1% of their initial capital "“ restoring approximately 61% of their initial investment.1 At the other end of the scale, a few customers received an offer that restored up to 107% of their initial capital." "We were not able to discern a pattern in ANZ decisions to award any given percentage of compensation. However, by dividing the offered percentages into three categories of a 15% range, it becomes clear that only about a quarter (24%) was offered a full or near-full restoration of the money they entrusted to ANZ/ING." Later on Wednesday ANZ responded to the claims, with a spokesperson saying the bank had not yet written back to all of the affected customers and that the information provided by the Frozen Funds Group was "inaccurate", although they did not say how it was inaccurate. The spokesperson said individual claims were confidential. Here is ANZ's response:

"ANZ is currently responding to clients that took advantage of the process we put in place at the time of the ING NZ offer. We assessed the merits of each client's circumstances on a case by case basis and have undertaken rigorous file by file assessments to get a fair outcome. The settlements are offered on a confidential basis, in the same way that we treat all of our banking relationships with a high level of confidentiality. As we have yet to complete the process of writing back to all affected customers we are not in a position to talk about levels of compensation. The information provided by the Frozen Funds group is inaccurate and we would urge people to look at the offer they have received in the context of their own circumstances. We would not expect people to disclose their confidential settlements. We acknowledge this process has taken longer than expected but we are committed to getting as many of the settlement payments as possible made before the end of the year."

The full report is below: Frozen Funds File Report 5 - Survey ANZ Additional Claims 24Nov09