Insights for consumers
If you’re investing in managed funds, always read the product disclosure statement, terms and conditions, and any other information about the fund carefully. Even if a fund is marketed as ‘long-term’, the fund manager may still have the right to close it early.
Under our terms of reference, known as our rules, we cannot investigate complaints about the ‘management of a fund or scheme as a whole’, so we could not investigate Arjun’s complaint.
What happened with Arjun’s funds?
In 2021, Arjun invested in two specialist funds offered by an investment fund manager. These funds were advertised with a minimum suggested investment timeframe of 7–10 years.
In 2025, the fund manager emailed Arjun to say the funds were closed to new investments. Two weeks later, Arjun was advised that both funds would be wound up because demand was much lower than expected. The manager sold the investments, returned the proceeds to investors, and suggested alternative investment options.
Arjun complained to FSCL that:
- closing the funds early caused him about $6,000 in losses
- the alternative options were not equivalent and involved extra tax obligations
- the marketing was misleading because it promoted long-term investment, but the funds were closed early
- the manager should have disclosed the risk of early closure more clearly in its documents
- the manager breached section 446C of the Financial Markets Conduct Act 2013 (FMCA).
Why FSCL could not investigate Arjun’s complaint
We considered whether the complaint fell within our Terms of Reference (TOR). Paragraph 17 of the TOR says we cannot consider complaints about the management of a fund or scheme as a whole. The decision to close the funds was a management decision, not an issue of investment performance.
The exception for ’nondisclosure or misrepresentation’ applies only to complaints about investment performance, or about the risks of the investment — not to decisions about fund management.
Why the CoFI and FMCA rules did not apply
We also considered Arjun’s arguments about the Conduct of Financial Institutions (CoFI) regime and FMCA.
The fund manager was not a ‘financial institution’ under section 446E of the FMCA because it is not a registered bank, licensed insurer, or licensed non-bank deposit taker. Therefore, section 446C did not apply.
Because the complaint was about fund management, FSCL did not have jurisdiction to investigate.
What was the outcome of FSCL’s investigation
We explained to Arjun that his complaint was about the management of a fund, which falls outside FSCL’s jurisdiction. After providing information about other avenues available to pursue his complaint, including speaking to the Financial Markets Authority, we closed our file.
