08 October 2010 in Jamie’s View
Give me my money back
If the worst of the global financial crisis is behind us and Wayne Swan’s bank deposit guarantee no longer exists, why are many Australians still fighting with investment firms over frozen funds which have been locked away for almost two years?
The government’s bank deposit guarantee, introduced at the height of the financial crisis, was meant to stabilise financial markets and restore the flow of credit. It covered all deposits of banks but excluded investment funds. This triggered a lockdown of deposits in investment funds and left hundreds of thousands of Australians in the lurch.
When the government decided to remove the bank deposit guarantee in March this year, citing improved conditions in the banking sector, many expected it to facilitate the release of frozen funds, particularly those smaller funds held by ordinary Australians. This decision was a sign and an expectation that things would start to return to normal.
But six months after this decision, the frustrations for many Australians with frozen funds remain.
If the bank deposit guarantee sparked the decision of investment firms to freeze funds, what is their excuse for doing so now it’s gone?
I have been in contact with a number of people who have told me of the financial pain caused by their inability to access funds since the height of the global financial crisis hit two years ago.
One couple who have had their funds frozen by Colonial First State have been forced to return to work and delay retirement because Colonial cannot provide any certainty or indication as to when his investments will be returned.
Colonial continues to knock back applications for withdrawals and will only release funds on three month intervals. But they can’t indicate the timing of these payments or the amount of money that will be released.
This provides no comfort for the many Australians who are currently trying to plan for retirement.
It is rather odd that a leading Australian investment firm such as Colonial still considers it necessary to withhold money from small investors given the most serious challenges of the global financial crisis have passed.
Colonial rightly has a strong reputation in the community. However it does not appear to be respecting the right of its customers in this instance.
Whilst we all can appreciate the need for Financial Institutions to protect themselves from a systematic collapse, the fact that funds remain inaccessible for almost two years is inexcusable.
Treasurer Wayne Swan said at his press conference when he announced the removal of the bank deposit guarantee that the decision was taken on the “unanimous advice” of the Council of Financial Regulators and went on to say: “The Council has advised that bank funding conditions have improved such that the guarantee is no longer needed.”
If conditions have improved, which they have, then investment firms should start operating that way and stop this freeze.
Wayne Swan should intervene and demand investment firms release the frozen funds of ordinary Australians so they can get on with planning their financial future.