by Paul McBeth
Fair trading manager Graham Gill said the tax benefits for ‘non de-minimis' investors - that is those investors that are not people or those with units valued at more than $50,000 - had been able to claims some $100 million in tax rebates, and the courts would have to factor in the tax claims in any successful legal action.
"Once the tax rebates were factored in, this reduced the actual ‘potential further payments to investors' to around $25 million," Gill wrote in an article for the July Frozen Funds Group newsletter.
Ultimately, the commission agreed to a $45 million settlement with ANZ and ING over the promotion of the diversified yield and regular income funds, on top of some $500 million already paid to investors through the ING offer, interest paid on high-interest on-call accounts and payments made under the Banking Ombudsman.
Though the regulator's investigation found the bank and fund manager probably breached the Fair Trading Act, and believed it could achieve convictions, any potential fines awarded would have "paled in comparison" to the sum negotiated, Gill said.
He also warned that any legal action would have been "lengthy and expensive" with ANZ and ING disagreeing with most of the commission's findings.
The commission has a week to determine the payment process with ANZ, with investors due to be paid on October 26, some 90 working days after the settlement agreement was signed.
Paul is a staff writer for Good Returns based in Wellington.
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