ING revamps offer to locked-in investors

ING has revamped its offer to 8000 investors locked into two frozen funds to include the option of having an ANZ cash account that will pay 8.3 per cent interest guaranteed for five years.

But investors will also have to forego any future claims or legal action against ING and its 49 per cent shareholder ANZ bank if they accept it.

The offer is the third version of a proposal initially put together by ING in February for investors stuck in its Diversified Yield Fund (DYF) and Regular Income Fund (RIF).

The two funds, which invested in complicated packaged debt securities, were frozen in March last year after they began to lose value in the wake of the credit crunch.

At the time of the freeze the two funds were worth around $500 million, their value has since fallen to $143 million.

In February, ING said it would pay investors in the DYF 60c per unit now or 83c if they waited five years. RIF investors were being offered 62c now or the promise of at least 86c a unit in five years.

ING chief executive Helen Troup said the level of money available to investors was essentially the same as what was offered in February, but it had increased the options to get cash out as a result of feedback from investors who said five years was too long to wait for their money.

Troup said it had also received a report on the two funds which said the chance of upside in the funds in the next five years was very unlikely.

Investors will now have three options. They can either take their cash out now at 60c or 62c per unit, invest that money into an ANZ cash account that will pay a guaranteed 8.3 per cent per year for five years and allow investors to take their money out at any time, or not take part in the offer and remain in the fund.

After five years in the cash account, investors in DYF would receive around 91c per unit and those in RIF would receive around 94c per unit if their money was left in and interest was compounded.

But investors will also have to pay tax on the interest at a rate dependent on their personal tax rate.

Troup said the new proposal was designed to be simpler and more flexible.

"What we are able to do won't please everyone. But we do hope it restores some faith and trust in our integrity and in our commitment to put it right as much as we are able to do," she said.

Unlike the previous proposal, investors will not have to collectively vote on it, it will be up to them to decide individually.

But a condition of accepting the proposal is that investors agree not to start or continue with any claims or legal action related to the funds.

"We believe this is a reasonable term as part of this very good offer."

However ANZ, which is a 49 per cent shareholder in ING and sold the product to 2700 of the 8000 investors, has said it would allow investors to accept the offer and still make a complaint to itself and the banking ombudsman if they did so before July 31.

ANZ spokesman John Body said it had put a deadline on the complaints because it wanted closure.

"We think the deadline is sufficient time for people to review their own situations and decide what they want to do."

He estimated around 10 to 15 per cent of the 2700 investors had already complained to the ANZ about the funds.

Banking ombudsman Liz Brown said she had been asked to investigate around 300 cases and had now completed looking into around 100 of those.

She believed it was fair for the ANZ to put a deadline on complaints and said it was hard to tell how many more the ombudsman would receive.

ING and ANZ are also being investigated by the Commerce Commission over the two funds.

Hector Fsadni, spokesman for the investor action group the Frozen Funds Group, said he would be getting legal advice on the agreement but the group's ultimate goal remained a full product recall and repayment of investors' money.