Corporate watchdog Australian Securities and Investments Commission (ASIC) said it would extend relief to operators of "frozen funds" making hardship payments to members where the fund is in the process of winding up.

In a statement, ASIC said the relief is extension of the relief the watchdog has granted since October 2008 to improve investor access funds, to allow the operators of frozen mortgage funds to pay hardship withdrawals, subject to certain conditions. This relief only operated while the fund was operating, and did not extend to the situation where a fund is being wound up.

The hardship grounds that apply are the same as the existing hardship relief for frozen funds. The member must be able to satisfy the operator that they meet one of the following criteria: 1) member is unable to meet reasonable and immediate family living expenses; 20 compassionate grounds (e.g. medical costs for serious illness, funeral expenses or to prevent foreclosure); 3) permanent incapacity; and 4) member is unemployed for at least three months, without other means.

The conditions on the hardship relief are also the same as the existing hardship relief for frozen funds. They include: 1) the cap on hardship withdrawals for each member is $100,000 each calendar year; and 2) an investor can make up to four hardship withdrawals a calendar year (subject to the overall cap of $100,000).

In deciding whether to grant hardship relief for a frozen fund that is in the process of winding up, we will pay particular attention to whether the fund can make a full return of capital to members. In balancing the interests of all investors, ASIC may decide not to grant relief if we consider that members suffering hardship may receive a full return of capital, and other members may not.

Responsible entities of frozen funds that are being wound up will need to apply to ASIC for the relief by emailing applications@asic.gov.au, or posting the application to Manager - Applications, Australian Securities and Investments Commission, GPO Box 9827 in your capital city.