Earlier this year OnePath announced it had decided to wind up the Private Portfolio Service (PPS) Superannuation Fund scheme, as well as the PPS Mortgage Trust.

However, according to a recent memo to advisers, payments from the mortgage trust wind-up are on hold for now.

"We had intended to make an initial distribution from the Mortgage Fund this month however, the Trustee, who is the independent third party with ultimate oversight of the Fund, has determined that a partial wind-up distribution cannot be made at this stage," OnePath's memo said.

"This is due to an on-going contractual arrangement with Portfolio Mortgage Company Limited."

The fund holds liquid assets of about $31.2m as well as mortgage or loan assets of about $15.1m, however, "This arrangement obligates the fund to advance up to $50m of mortgage or loan assets on demand."

Good Returns has obtained a copy of a complaint about the mortgage fund, laid by an adviser who claimed some of ANZ's actions over the fund hadn't been in investors' best interests.

"Until recently a number of investors held units in the PPS Mortgage Fund "B" Units. OnePath, via ANZ, purchased all the "B" units for cash," the claimant said.

"Instead of repaying the funds to the mortgage fund "B" unit holders, OnePath unilaterally swapped the "B" units for units in the PPS Mortgage Fund.

"In a number of cases OnePath held instructions to repay the "B" units when available. These instructions were ignored and replaced with the unauthorised swap method."

The complainant also said the size of both the mortgage fund "A" and "B" units has been well under the $50m mark for quite some time, and "neither OnePath nor the Trustee [Guardian Trust] has acted to warn either advisers or investors that this could cause the fund to be suspended."

However, the FMA said ANZ's purchase of the illiquid "B" units complied with the trust deed, which "required upon the realisation of the B Units they be cancelled and "...be applied immediately thereafter towards subscription for A Units...".

"The Trustee has advised me that they sought independent legal advice and that unfortunately the strict terms of the unit trust trust deed has resulted in the proceeds received for the B Units being required by the terms of the trust deed to be used to buy A Units. 

"The Trustee has further determined that the requirement to have funds available to meet the PMCL funding obligations prohibits a partial distribution at this time.

"I appreciate that this was not the outcome that OnePath anticipated and that earlier communication material may have indicated that the proceeds of the B Units may be available for distribution this month and that this will now not occur."