The relief is available through a legislative instrument, which applies to all responsible entities (REs) of registered managed investment schemes that have become “frozen funds”, where the RE has suspended or cancelled redemptions to prevent their fund from being destabilised.
ASIC stated the measures will ease some of the statutory restrictions on responsible entities and improve access to investments by members who meet specific hardship criteria.
The relief will be available to REs of all frozen funds, regardless of whether the scheme was liquid or illiquid, provided that the RE has ceased allowing new interests in the scheme, including distribution reinvestments and issues to existing members.
The eligibility rules for withdrawals state that a member must meet at least one hardship criteria, such as severe financial hardship, unemployment for more than three months, compassionate grounds or permanent incapacity.
Members will be able to withdraw up to $100,000 of their investment per calendar year and receive up to four withdrawals per calendar year.
Previously, the regulator only granted hardship relief to REs on a case-by-case basis. ASIC initially granted rolling withdrawal relief and case-by-case hardship relief after the global financial crisis, when many schemes became frozen.
ASIC deputy chair Karen Chester said the regulator recognises responsible entities may need to freeze funds under extreme market volatility to protect members’ interests, but the action can prove “problematic” for individuals experiencing financial distress.
“The hardship relief will make it easier for responsible entities of frozen funds to enable withdrawals by investors suffering hardship,” Ms Chester said.
“We encourage responsible entities to consider whether the relief is appropriate for their particular fund.”
ASIC has also signalled it will consider relief to REs of illiquid schemes on a case-by-case basis to allow rolling withdrawal offers to be made to members with administrative ease.
