Investment funds have a history of problems with unit pricing. ING is the latest to admit its unit pricing practices have been deficient. A matter involving unit pricing errors by National Australia Bank in 2001 resulted in compensation payments to investors of approximately $68 million.
ASIC has accepted an enforceable undertaking from ING
Australia Limited, a joint venture between ING Australia Holdings
Limited (INGA Holdings) and ANZ Orchard Investments Pty Ltd, and six of
ING Australia’s subsidiaries.
The enforceable undertaking follows ING Australia
advising ASIC that it had identified unit pricing errors affecting
superannuation, life insurance and managed investment products provided
by its subsidiaries.
Under the enforceable undertaking, ING Australia
will compensate investors an estimated $14 million for unit pricing
errors in accordance with a compensation policy and project plan to be
agreed with ASIC. Investors will receive the compensation through unit
adjustments or cash payments. In addition, an estimated $10.5 million
will be paid to investment options within financial products where a
unit pricing error has been identified. These compensation figures are
estimated as at 31 August 2005.
The enforceable undertaking ensures that:
- investors are appropriately compensated
- appropriate disclosure of the unit pricing errors is made
- deficiencies in ING Australia’s unit pricing practices and processes have been remedied, and
- an external expert reviews the process of compensating investors and provides a report to ASIC.