KEY POINTS:
A retail bank that sold customers into now-frozen ING investment funds has given at least two of them interest-free loans to help them out of financial dire straits.
The Office of the Banking Ombudsman says it has arranged the help while it processes an "influx" of complaints from
people who invested in the ING Diversified Yield and Regular Income Funds on the advice of their bank.
The funds, which had some exposure to the US sub-prime mortgage market, were indefinitely frozen in March due to the effects of the credit crunch. That has left 8000 investors unable to access a collective $521 million.
ANZ, which half owns ING New Zealand, was a heavy seller of the funds through its financial advisory network. Many older, cashed up customers were targeted and told the investments were "as safe as the bank". But it was not the only bank that sold the funds.
Banking Ombudsman Liz Brown says her office has identified customers suffering financial hardship as a result of the freeze on their funds, and helped arrange some relief on a goodwill basis.
In her latest newslettter Brown highlights two cases. She says Mr A had been advised to invest in one of the ING funds but had stressed to his bank that he required ready access to his money. His wife was unwell and he needed to pay for her hospital care, plus expenses associated with his own medical problems.
His bank has offered him an interest-free loan to tide him over until there is more certainty about the future of his investment.
Likewise, the bank of Mrs J and her elderly mother has offered them an interest- free loan. Mrs J had invested in the fund on behalf of her mother, who is in a rest home. The mother's condition has now deteriorated and she needs more intensive and expensive care. They have no other money to pay the rest home fees.
In the separate case of a retired couple who have a large amount invested with interests of the ANZ, including the frozen ING Regular Income Fund, the ANZ has repaid their considerable monthly monitoring fee.
The couple decided not to go to the Banking Ombudsman, but settled separately with the bank. The wife said ANZ had agreed in writing to contact them every month to discuss the progress of their investments, but they didn't hear a word for four months.
She said the bank "admitted they haven't performed as they should have".
ANZ said this week it was not able to comment on individual cases.
It has never publicly conceded it erred in putting conservative, elderly investors into funds with exposure to the US sub-prime market. "We're working hard to respond to our client concerns," it told the Herald in April. "This is a complex situation and our process is not yet complete."
It has also denied its financial advisers were given any special incentives to sell the ING funds.
The funds remain suspended.