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ASIC makes frozen funds easier to access

  • August 27 2020
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Invest

ASIC makes frozen funds easier to access

By Grace Ormsby
August 27 2020

A new relief measure will enable investors suffering hardship to access their investment money even where managed funds have been “frozen” to maintain fund stability through the COVID-19 pandemic.

ASIC makes frozen funds easier to access

ASIC makes frozen funds easier to access

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  • August 27 2020
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A new relief measure will enable investors suffering hardship to access their investment money even where managed funds have been “frozen” to maintain fund stability through the COVID-19 pandemic.

ASIC makes frozen funds easier to access

ASIC announced the conditional relief in a statement on Wednesday afternoon, saying that it will make it easier for responsible entities of frozen funds to enable withdrawals by investors suffering hardship and improve access to those funds for affected individuals.

Previously, this relief was only available on a case-by-case basis only.

Funds are usually frozen when the responsible fund manager has suspended or cancelled redemptions to improve fund stability during times of volatility, such as the current pandemic.

ASIC pointed out that when a fund is frozen, members will generally not have access to their investments for a period of time, but that this does not necessarily mean that there has been a loss of asset value or that investors will not get their money back eventually.

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According to the corporate regulator, to be eligible to make hardship withdrawals from frozen funds, a member must meet at least one “hardship criteria” such as severe financial hardship, unemployment for over three months, compassionate grounds or permanent incapacity.

Weighing in on the loosening of statutory restrictions, ASIC deputy chair Karen Chester acknowledged that fund freezing will protect the interests of members as a whole during times of extreme volatility.

While it may be the “right thing” to do, Ms Chester said “this can be especially problematic for some individual members experiencing financial hardship”.

As a result, the hardship relief will make it easier for responsible entities of frozen funds to enable withdrawals by investors suffering hardship, she highlighted.

“In doing so, responsible entities will still have to act in the best interests of members. We encourage responsible entities to consider whether the relief is appropriate for their particular fund,” the deputy chair concluded.

ASIC makes frozen funds easier to access
ASIC makes frozen funds easier to access
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About the author

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Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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