International Law

ASIC has announced the conditions on which it will consider applications from mortgage funds which have frozen redemptions to permit early withdrawal for members where there is hardship.

This relief will generally only be given on a case-by-case basis for mortgage trusts.



What are hardship grounds?

Generally, hardship withdrawals will only be permitted where the member is able to satisfy the operator that they meet one of the following criteria:

1. where the member is unable to meet reasonable and immediate family living expenses;
2. on compassionate grounds (e.g. medical costs for serious illness, funeral expenses, to prevent foreclosure); and
3. in the case of permanent incapacity.

What conditions apply?

In allowing earlier access to some members and not to others, ASIC has balanced hardship against the interests of other members. Therefore ASIC considers that there should be a cap on withdrawals on hardship grounds. The hardship withdrawal cap would be the lesser of:

1. the specific amount requested under the hardship withdrawal request; or
2. $20,000 per member plus 50 per cent of the balance of the member???s investment in the scheme. For example, if a member has an investment value of $100,000, the member may access $60,000 under this proposal.