Challenger International financial planning subsidiary Garrisons has made an enforceable undertaking to the Australian Securities and Investments Commission (ASIC) to pay interest to clients who have been unable to redeem their investments in non-performing solicitors mortgage investment funds in Tasmania.
Garrisons agreed to make an interest payment of 6 per cent per annum to clients who signed a deed of assignment with Garrisons which will be paid off before December 2002.
ASIC says it has estimated that the total return of capital and interest to affected clients by Garrisons will be in the order of $2.5 to $3 million dollars.
Garrisons had said in early June that the total amount it planned to return to its clients affected by the mortgage schemes was $10 million. At that stage the adviser group was leading a legal battle against the Law Society of Tasmania to get the clients’ capital returned.
Garrisons has also agreed to pay clients the capital investment that it offered on June 13 this year on receipt of a signed deed assigning some rights of the client to Garrisons. It is also obliged to keep ASIC informed with written notice at the end of March and September each year of details of payments made to affected clients in the previous six months.
ASIC has also requested that Garrisons have an independently prepared report by an evaluator on its compliance program, which will be due in at the Securities watchdog by December 31.
“ASIC was concerned about the advice Garrisons gave to their clients who invested in solicitors mortgage investment funds,” ASIC national director financial services regulation Ian Johnston says.
“We sought compensation for these clients and we are satisfied that this is the best possible outcome we could have obtained.”
