The Ghana Securities Industries Association has raised some concerns over government’s claims of payment to 96 percent of depositors’ claims.
In a statement issued by the Association, it indicated that there is the lack of traction on pay-outs to clients of firms whose licenses were revoked.
It disclosed there was an arrangement between its members and government that 20 per cent of the ¢1.58 billion due investors will be paid in cash while the rest bonds.
“To date, less than GHC 90 million out of GHC 1.58 billion due these investors has been paid in cash. This represents less than 6% of the total amount due. We are yet to realize the fulfilment of a promise by Government to pay up to 20% more in cash, leaving 80% in bonds. A commitment to pay clients of firms whose licenses have been revoked while customers of operating firms are still waiting for cash pay-outs sends the wrong signals to the industry; the pay-off for having a license revoked may be more than that for keeping an investment firm in operation.
“Communication from various government sources that about 96% of investors have been paid has served to cause more worry in the sector as investors demand their cash from fund management firms who are still waiting for these funds. This communication means that the proposed 20% cash pay-out from government will be seen as totally inadequate and not representative of the said 96% pay-out”.
The Association stressed on the fact that most fund management firms presented ‘grouped’ claims on behalf of their clients, and not individual claims, to the Receiver of collapsed MFIs and S&Ls.
This, the group states “resulted in treatment of claims presented as single claims by Fund Managers and not as individual investors of fund management firms. As such, a large number of investors of fund management companies remain unpaid”.
On the way forward, the Association argues that government, through the Finance Ministry, should urgently increase the proposed cash pay-out to fund management firms to levels that properly reflect its communication to the public, ensuring that about 96% of its clients are paid.
It further indicated that to ease rising tensions among depositors, a revised public messaging that correctly captures the situation on the ground be released: that so far only GHC 87 million out of GHC 1.58 billion has currently been paid in cash to the sector. Updates to this position can then be made as any additional cash payments are made.
“We believe that these actions will greatly ease the liquidity pressure in the sector and clarify the situation with respect to investors’ funds held with Fund Managers”.
