Wait to see ING proposal's fine print, say advisers

Investors should wait to see the finer details of ING New Zealand's latest frozen fund proposal before making a decision, say a group of advisers who called its first offer a disgrace.

Last week ING revealed a rejigged proposal offering the 8000 investors in its Diversified Yield fund and Regular Income fund an up-front cash offer or the opportunity to wait five years for essentially the same amount with interest, but the potential to earn more if the funds make a recovery.

Those who choose to cash out of Diversified Yield will get 60c of every dollar invested, if they wait five years they will get at least 83c.

Regular Income investors are being offered 62c now or at least 86c a unit in five years.

Independent Action Group spokesman Malcolm Eves said while it was an improved offer, without the details it was difficult to advise people.

"I have had people ringing me all day asking whether they should take the offer. But we can't tell people what they should do until we have the details. The devil of it will be in the fine print."

Eves said one concern was that investors who chose to wait out the five years would not receive any distribution payments during the period. Investors have been receiving these while the funds have been frozen.

Eves said many of his clients invested in the fund to receive an income to supplement their retirement earnings.

Hector Fsadni, spokesman for the Frozen Funds Group, said it would not be making a recommendation to its members as it did not want to be held liable.

But he believed most would turn it down given many had invested their life-savings in the frozen funds and they felt the only viable solution was a full repayment.

Fsadni said the group would pursue its campaign for a full product recall and repayment to investors on the belief that the funds had been mis-sold to investors. He believed investors had several means to pursue this, firstly through the Commerce Commission investigation and secondly through a public pressure campaign it was mounting by talking to politicians, the media and other ING investors around the globe.

Fsadni said while the second deal was a great improvement it still meant investors would suffer about a 40 per cent loss.

ING chief executive Helen Troup said she firmly believed the funds had not been mis-sold. "We stand behind our disclosure document, our marketing and our communication."

Troup said the offer was the best the group could come up with and she believed it was a good offer in the market conditions.

The company did not have a plan B if the proposal failed to pass.

The only other option was the status quo.

A spokesperson for the Commerce Commission said it had not considered what impact the proposal and its vote outcome would have on its investigation at this stage.

It does not comment on the progress of any of its investigations and would not say what the potential compensation for investors might be if ING was found to be in breach of the Fair Trading Act.

"We cannot make any further comment about the investigation and its possible outcomes, including whether compensation is possible, as this would prejudge whether there is even a breach."

The Fair Trading Act penalty provides for a fine of up to $200,000 per offence for companies and up to $60,000 for individuals.

The two ING funds were frozen in March last year. At the time they were valued at $521 million.

* Investors who want to get in contact with the Frozen Funds Group can call 09 3791116 or write to PO Box 384 1116.