ING rejects review call

ING New Zealand chief executive Helen Troup rejects calls for a change in status. Photo from NZ...
ING New Zealand chief executive Helen Troup rejects calls for a change in status. Photo from NZ Herald.
The Frozen Fund Group is calling for ANZ-National Bank's investment arm ING to be removed as a default KiwiSaver provider but ING said yesterday there was no basis for calling its status into question.

The Commerce Commission recently reached a settlement with ANZ and ING over investment funds and secured $45 million for the thousands of New Zealanders who invested in two funds marketed by ING and ANZ-National Bank - the Diversified Yield Fund and the Regular Income Fund.

The settlement followed an investigation into alleged breaches of the Fair Trading Act relating to the marketing and promotion of the funds by both ING and the bank.

"In the commission's view, representations made by ANZ-National and ING concerning the degree of investment risk in the funds were likely to be misleading, in that the actual risk was understated.

We concluded that there was sufficient evidence to commence proceedings against both parties for breaches of the Fair Trading Act," commission chairman Mark Berry said at the time.

The Frozen Fund Group is preparing to petition Parliament, asking for the Government to study the Commerce Commission's finding, and the response by ANZ-National and ING, as a basis for a review on whether they should remain default KiwiSaver providers.

Group spokesman Gerard Prinsen said the commission's report and the ANZ-National and ING response to the report raised much bigger concerns for all New Zealanders.

More than 14,000 elderly New Zealanders had seen their financial security in retirement jeopardised by the behaviour of ANZ-National and ING.

Hundreds of affected investors organised themselves, protested outside ANZ branches and lobbied hard to obtain, in three successive steps, partial compensation for their losses, he said.

"We believe the 300,000 New Zealanders who are currently saving for their retirement through ANZ and ING - as one of the nation's default KiwiSaver providers - are facing exactly the same future."

The Commerce Commission's report gave the Government several reasons to review ANZ-National and ING's status as a default KiwiSaver provider, Mr Prinsen said.

It did not seem possible the bank and ING could remain a default KiwiSaver provider when the commission concluded they had engaged in "misleading or deceptive conduct and made false or misleading representations, he said.

"Can they remain a default KiwiSaver provider when they made 99% of the investors sign a legal waiver in June 2009 that explicitly takes away their right to benefit from [a] commission inquiry?"A review, and possible removal of ANZ-National and ING as default providers, would give a "relevant warning" to all default providers to keep up standards.

It would also give a good incentive to non-default providers that they could successfully compete for occasional vacancies among default providers if they kept up standards, Mr Prinsen said.

ING chief executive Helen Troup told the Otago Daily Times that all default KiwiSaver providers were subject to a regular review through the Government's regulation of the scheme.

The commission settlement related to the two particular funds which were significantly affected by the global financial crisis.

ING managed more than 100 funds and none of those other funds were affected by the losses to the diversified and regular funds, including KiwiSaver funds.

KiwiSaver funds were managed as a trust and that meant all money in the fund was kept separate from any other ING money, she said.

"KiwiSaver schemes are subject to extensive reporting and governance from the Ministry of Economic Developmentand Inland Revenue."

ANZ and ING had returned to date $550 million to investors who had suffered losses in the diversified and regular funds.

Commerce Minister Simon Power rejected the call for a review of ING as a default provider.

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