- SEC to establish Investor Protection Fund
Of the total amount of claims from signed up clients of some 20 defunct fund management companies which have undergone official liquidation, just about 34 percent has been paid, the Registrar General, Jemima Oware, has revealed.
An estimated GH¢8billion is said to be locked up in the 53 fund management companies which had their licences revoked by the Securities and Exchange Commission (SEC) in November 2019. However, according to Ms. Oware – whose outfit is the official liquidator of the collapsed fund management companies, government through GCB Capital Ltd. has paid over 2,220 claimants to the value of GH¢263million as of November 16, 2020.
The total claims signed-up by the 4,154 clients of the 20 liquidated companies are valued at GH¢737million – indicating that more than half of the claimants have been settled under this bailout scheme.
Already, government has introduced a two-tiered payment structure that allows individuals who are 60 years and above – as well as schools, faith-based organisations – to receive 100 percent of all validated claims in tier-1, which allows for immediate withdrawals if so desired.
Then, those below 60-years will receive 20 percent of validated claims or up to GH¢70,000 in tier-1. Any outstanding balance will be in tier-2, which operates as a long-term component with withdrawal restrictions.
Despite this progress, most affected customers have described the process as slow – calling on the RGD to expedite action on settling their claims. However, Ms. Oware says there are a number of constraints which are hampering the liquidator’s work.
These, she said, include complex and bureaucratic court processes; inability to effect service on some directors and companies, and in some cases, inability to locate some companies; incorrect contact details; and dispute over validated claims, among others.
According to the Director General of SEC, Daniel Ogbarmey Tetteh, clients can receive their claims within 48 hours if all required documentation and processes are followed as directed.
Commenting on the way forward to reduce the possibility of this happening in future, Dr. Tetteh said the regulator has initiated steps to establish an Investor Protection Fund to provide a roadmap to guide the industry in the event of any such occurrence.
“When we talk about the Investor Protection Fund, it will typically have provisions on how it will be applied. What we have done is to start the process by putting together a concept paper. We have to do a number of engagements with various stakeholders to crystalise how it will be funded, how it will be applied, and all that. We know that in the banking sector they have deposit insurance but we don’t have this in our space so this is something we want to establish,” he told the media during a press engagement in Accra.
Meanwhile, government has provided GH¢1.4 billion bailout package to embattled customers of 27 collapsed fund management companies, including Gold Coast Ltd, who, hitherto, had not received a penny due to prolonged validation process, court actions, among others.
A press release by the Securities and Exchange Commission (SEC) dated November 18, 2020 stated that government has authorised a partial bailout which involves payment of up to GH¢50,000 to all customers of the remaining affected fund management companies while the court process on the liquidation petition and other matters continue.
This means that all 92,460 affected customers under this special arrangement will receive claims no more than GH¢50,000, even if their deposits exceed that. Such customers, according to the press release, will be settled after the liquidation proceedings in court, in line with the terms being applied under the bailout package for the clients of the fund management Companies currently under official liquidation.
The post Fund managers’ bailout Just 34% validated claims paid so far – RGD appeared first on The Business & Financial Times.
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