Tens of thousands of Australians have been left anxious after La Trobe Financial froze access to more than $11.5 billion in investor funds, following action from the corporate regulator ASIC. The move has raised questions about the safety of investment products marketed as “low-risk” but tied to higher-risk property loans.
Why Did ASIC Step In?
The Australian Securities and Investments Commission (ASIC) issued interim stop orders on three of La Trobe’s seven investment products:
- 12-Month Investment Account
- 2-Year Investment Account
- USPC Fund Class B
ASIC alleged that the products:
- Were marketed as low-risk, but funds were directed into high-risk loans to property developers.
- Did not adequately specify the investment timeframe for retail investors.
Because many of La Trobe’s clients are retirees seeking safe and steady returns, ASIC argued the investments may not have been appropriate for their financial goals.
What Happened Next?
Following ASIC’s orders, La Trobe decided to freeze all investor accounts, affecting around 120,000 Australians. The firm also took down its online portal, La Trobe Direct, preventing clients from accessing or adding new funds.
Currently:
- Existing funds remain invested.
- La Trobe says income payments will continue as normal.
- The freeze is temporary, tied to ASIC’s 21-day stop order (unless extended).
La Trobe’s Response
La Trobe Financial’s Chief Investment Officer, Chris Paton, urged investors to remain calm:
“Your investments with La Trobe Financial remain safe and under our careful stewardship. Each of our products are supported by diversified, high-quality loan assets built with conservatism at their core.”
Paton emphasized that La Trobe is working closely with ASIC to resolve the issues and restore investor access as soon as possible.
Key Takeaways for Investors
- Not a bank deposit: Unlike term deposits with banks, La Trobe products are tied to private credit loans.
- Rates on offer: As of September 1, La Trobe listed variable rates of 6% (12-month) and 6.1% (2-year).
- Risk profile: Returns may look attractive but are linked to property development loans, which carry higher risks than traditional savings accounts.
- Temporary freeze: While access is restricted, La Trobe insists income distributions will continue.
FAQs
1. Are investor funds lost at La Trobe Financial?
No. The funds are frozen, but La Trobe says investments remain secure and income payments will continue.
2. How long will the freeze last?
ASIC’s stop order is valid for 21 days unless revoked earlier or extended.
3. Can I withdraw or add money to my La Trobe account?
Not at the moment. The La Trobe Direct platform is offline, and new investments are paused.
4. Why did ASIC intervene?
ASIC believes the products may have been marketed as safer than they actually are, exposing retirees and conservative investors to inappropriate risks.
5. What should affected investors do now?
Stay informed through official updates from La Trobe Financial and ASIC. Avoid making hasty decisions until the situation becomes clearer.
Final Thoughts
The freeze on La Trobe Financial’s $11.5 billion in investor accounts is a wake-up call for everyday Australians about the importance of understanding where their money is really invested. While La Trobe insists funds are safe, ASIC’s intervention highlights the risks of products marketed as “safe” but linked to property development loans.