Has your managed fund been frozen? Here’s what investors need to know
- As an investor, you may still be able to access your money if you’re experiencing financial hardship – contact your responsible entity for more information.
- Freezing a fund does not always mean that distributions, such as income payments, have stopped.
- The Australian Financial Complaints Authority can help resolve disputes between consumers and financial firms, including responsible entities of managed funds.
A managed fund is considered 'frozen' when the responsible entity (also referred to as the fund manager) suspends the right of members (investors) to withdraw their money. A fund manager may choose to freeze withdrawals during times of market volatility and economic stress, such as that being experienced as a result of the COVID-19 pandemic or was experienced during the global financial crisis.
Freezing a fund is often a prudent measure to protect all members’ investments. It does not necessarily mean that distributions, such as income payments, have stopped. It also does not necessarily mean that the value of your investment has decreased or that your money has been lost.
Can I withdraw my money from a frozen fund?
Responsible entities must notify members if their fund is frozen.
If you are experiencing financial hardship and your fund has frozen, you should contact your responsible entity to see if you are eligible for a hardship withdrawal. You may be able to withdraw your money if you meet one of the following criteria:
- you cannot meet reasonable and immediate living expenses
- you are unemployed for at least 3 months and have no other means of financial support (except government assistance)
- you satisfy certain compassionate grounds (for example, you have medical costs due to serious illness)
- you have suffered permanent incapacity.
Subject to the responsible entity’s discretion, members who meet the hardship criteria may:
- withdraw up to a total of $100,000 per calendar year; and
- receive up to four hardship withdrawals per calendar year.
Your responsible entity must have notified ASIC that they propose to offer hardship withdrawals. The fund must also have adequate cash in the fund to make hardship withdrawals and continue to operate the fund.
Frozen funds whose responsible entities have notified ASIC that they propose to offer hardship withdrawals are listed on ASIC’s website.
My managed fund knocked back my hardship withdrawal request. What should I do?
If you are having issues with your responsible entity, contact them directly in the first instance. They may be able to resolve your complaint through their internal dispute resolution process. Information on how to complain directly can be found on their website, Financial Services Guide (FSG) and/or Product Disclosure Statement (PDS) provided to you.
If they don’t resolve your complaint satisfactorily, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA) at no expense. AFCA is a free, fair and independent dispute resolution scheme for financial services. AFCA is an alternative to tribunals and courts for resolving complaints consumers and small businesses have with their financial firms.
If you have money in a managed fund and you’ve just found out the fund has been frozen – don’t panic. You may be able to withdraw your money if you are experiencing financial hardship.
ASIC is Australia’s corporate, markets and financial services regulator.