Federal Minister for Superannuation and Financial Services Chris Bowen has offered little hope of financial compensation for investors and retirees caught up in the collapse of fund manager Trio Capital.
Mr Bowen said yesterday that only investors with money in a registered superannuation fund would be eligible for any government compensation, and only if fraud was proven.
The responsible entity for registered superannuation funds - the liquidators or the fund's trustee - would need to apply for such relief and he had not received an application to date.
He admitted there was no scope for government compensation for those who had invested through self-managed funds or other investors, although Centrelink had been encouraged to be flexible in providing assistance.
A large number of Illawarra investors - mainly clients of Wollongong financial planning firm Tarrants and financial advisor Colin Warne - fear they have lost nest eggs of up to $600,000 each, which they had invested in Trio's flagship Astarra Strategic Fund. Dominion acquired Mr Warne's Trio clients in 2008.
In Shellharbour yesterday, Mr Bowen reassured investors that they could have confidence in Australia's superannuation and investment industry.
"We have a very good track record in Australia in terms of superannuation funds and the safety of those funds," he said.
"The number of failures is very small and the amount of money lost in superannuation funds, compared to the size of superannuation funds, is very small as well."
His response came after the Mercury reported how a retired Unanderra couple, caught up in the Trio collapse, had twice written to the minister, Prime Minister Julia Gillard, the Australian Securities and Investment Commission (ASIC) and Australian Prudential Regulation Authority.
Retiree Nathan (not his real name) and his wife had about $500,000 in the Astarra Superannuation Plan and Astarra Personal Pension Plan, with about 30 per cent of those funds invested in Astarra Strategic Fund. Administrators and ASIC have been unable to find the $123 million that Astarra Strategic had invested in a complex web of hedge funds in foreign tax havens.
In his letter (see below), Nathan criticised the regulators for keeping investors in the dark, freezing superannuation accounts and making investors foot the bill for administrators to clean up the mess.
He suggested the buck stopped with the Minister.
"Surely in this day and age, and with the compulsory payment of superannuation, the people of Australia need the assurance that the governments of the day have the right procedures in place to protect their investments," he wrote.
Mr Bowen said the regulators had stepped in "as soon as they became aware of a problem".
"They began investigating Trio in September 2009 and stepped in during December 2009," he said.
"There is a process we have to go through to assess the size of the problem and to assess what steps the Government can and should take with people that may have suffered a loss. I am very very aware of the issues and its impact on the Illawarra in particular."
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