The degree of anger at suspensions of German open-ended property funds during the crisis has been revealed, as the practice fuelled more than three quarters of the complaints filed with the new German funds Ombudsman, according to its report for its first quarter's activity.
The degree of anger at suspensions of German open-ended property funds during the crisis has been revealed, as the practice fuelled more than three quarters of the complaints filed with the new German funds Ombudsman, according to its report for its first quarter’s activity.
But consumers have been left disappointed, as many of their complaints have floundered, or were not made within the legally required time period, the Ombudsman’s office said.
“Problems of customers were overwhelmingly about investing money in open property funds,” said German fund trade body the Bundesverband Investment und Asset Management.
Over three quarters of the 93 written submissions the Berlin-based office received between September and December last year were about real estate funds, 14% concerned share funds and 4% were about fixed income funds.
Riester pensions and depot bank disputes were also subjects of complaints.
About 75% of the written submissions were about funds, and a further 20% concerned distribution.
The report said some consumers alleged mismanagement of property funds and dereliction of duty, ” for example, that one should have reacted more quickly to the financial- and real estate crisis”.
Firms should have managed risks far better was another complaint.
But consumers have been disappointed, as “such types of allegations were in all cases unsubstantiated. It was debatable how much fund management companies can have oversight of what kinds of investors and who exactly owns units in property funds, and what types of investment goals are being followed,” the Ombudsman’s report said.
Complaints about prospectuses of real estate funds – whether they mentioned or insufficiently represented the possibility of closure – in the main floundered as the legal period for complaining about prospectuses had expired.
In total the Ombudsman took 93 written submissions, and three quarters of these were about open property funds. By the time it produced its report, it had taken in 113 written submissions.
The limitations of the newly established system were shown by the fact it could not deal with 31 of the 93 written complaints it received, because the submissions concerned companies that do not take part in the Ombudsman process. Examples were submissions concerning advice about funds, or about closed funds. It directed 10 such disputes to more relevant bodies.
Of those it could handle, the average length of process was 109 days, though two took under a month to resolve.