Greenslade said "advisers took what they wanted" from a Morningstar report to try and boost investment in the Regular Income Fund (RIF).

The Morningstar report, prepared in April 2007, suggested around 25% of a defensive portfolio could be invested in RIF, but it did not include an allocation to ING's other CDO fund, the Diversified Yield Fund (DYF).

"The issue is, those advisers who wanted to sell the products, looked at certain aspects and took them in isolation," he said. "Morningstar are being unfairly bagged," as the company raised warnings about the funds in September 2007, six months before the funds were frozen, and advisers had access to the documents, he said.

"There were a number of guidelines around the use of the portfolios and one was that advisers could not be selective on what they chose to use and what they chose not to use within the portfolios." 

The Morningstar report discussed yesterday when Parliament's Commerce select committee met to question Banking Ombudsman Liz Brown over ANZ's role in selling the ING funds.

Brown said her office was reassessing what it considered an "acceptable" threshold of exposure to the funds. She said her office currently believes a 20% holding was fair.

Brown said it was clear that the funds were difficult to understand.

"They were certainly not well understood by investors, probably not particularly well understood by advisers."

Although this could make it difficult for investors, what is important for them to understand is the risk and terms of the product involved, she told the committee.

The committee chairman, Lianne Dalziel, was critical of ING's relationship in commissioning the report, but Greenslade said that is normal business practice, and that there was nothing out of the ordinary with companies like the fund manager entering commercial relationships with research agencies such as Morningstar.

The Ombudsman updated the committee on her office's progress in settling complaints against ANZ over the funds. Of the 129 completed investigations, 102, or around 80%, had been upheld.

She had received 521 complaints about ING, of which 195 had settled or were undergoing the bank's own process. 197 cases were still being investigated.

Investors in the funds have until the end of the month to lay a complaint with ANZ, and provided they do so, they can pursue action through the ombudsman's office if they are unhappy with the bank's decision, Brown told the committee.

She did not think an extension to the timeframe was necessary, as investors had already had more than a year to complain.