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ING defends CDO funds

ING has written to advisers saying that it can defend the decisions it has made over its distressed CDO-backed funds and that it will no longer pay advisers trial commissions on the funds.

Thursday, January 29th 2009, 8:10AM

ING general manager – managed funds distribution Wayne Becker says ING are “confident that we can explain and defend ING’s decisions, actions and statements over the past five years regarding these funds”.

He acknowledges the company has been getting plenty of bad press over the Diversified Yield Fund (DYF) and the Regular Income Fund (RIF), and press is now spreading beyond these two funds.

Becker says the company is preparing responses to the media and it will give advisers information to help answer questions from clients.

ING has also had feedback on its planned wind up of the funds and ING’s $100 million loan to provide some income to investors.

This feedback is being given to shareholders to incorporate into the proposal, but that has been delayed due to the holiday period.

“Getting information to you and your clients is a priority, and we will provide a further update as soon as we can. We apologise for any confusion this has caused.”

He also addresses reports over the Commerce Commission enquiry into the selling of these funds.

He says ING “have not received any formal notification from the Commission that a formal investigation is underway” but it is “more than happy to work with them to answer any questions that they have in relation to the marketing of DYF and RIF.”

Becker goes on to address industry rumours, such as its CDO team having left, its equities are now being run out of Australia, that there have been significant redundancies in its client services and registry team, and so on.

“None of these are correct,” he says. “There have been no changes to ING's Investment Management Team whatsoever.”

He says some advisers had asked that trial commissions on these funds be stopped. Consequently ING has stopped all trail commissions immediately.

It had been paying commissions at the rate of 0.50% based on funds under management.

However, ING will make individual trail payments to advisers who believe they should still receive them.

Likewise it has decided that the management fee accrued on these funds will be repaid to the respective funds.

“A decision has been made that this fee will be credited to the respective funds at the end of January 2009. Please note that this payment is based on the full 140 bps that were charged and accrued, which includes the trail of 50 basis points that has been paid to all advisers with clients in these funds. From the date this fee is paid back to the fund(s), the management fee will cease and no longer accrue until further notice.”

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