Clients of Storm Financial (Storm) have claimed they received copies of strangers’ files instead of their own when they applied to Colonial Geared Investments (CGI) for their loan documents in the months after the advice firm’s collapse.
In a submission to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into financial products and services in Australia, the Storm Investors Consumer Action Group (SICAG) said many clients formerly applied to CGI, the margin lending division of the Commonwealth Bank of Australia (CBA), after file doctoring murmurs filtered through the industry.
It is believed ASIC investigators and Slater & Gordon lawyers have sighted hundreds of “creatively doctored documents” indicating that the practice was systemic, SICAG’s submission said.
“Loan applications were routinely massaged to ensure the loans met the banks’ approval criteria. SICAG members who have successfully retrieved their loan documents – many of which contain blacked-out sections – have been shocked and alarmed to find serious errors relating to the stated annual income and in many cases personal data,” it said.
“It should be pointed out in this context that dozens of SICAG members, after formally applying for the return of their loan documents from Colonial, received documents relating to complete strangers. This is a clear and blatant breach of privacy that upset SICAG members at a time when they were at their most vulnerable.”
SICAG also added further fuel to rumours that ASIC were close to placing an enforceable undertaking on Storm, after including a copy of an email from ASIC’s Stakeholder Services Division to Storm’s Cairns franchise owner, Gus Dalle Cort.
“An EU was a way for Storm to agree to address ASIC’s concerns without going through a lengthy court process. ASIC was concerned that the Cassimatises were not giving clients the right advice; they were suggesting that they could sue the CBA and get the clients’ money back and telling them not to deal with the banks,” the email said.
“The EU was about getting Storm clients to other advisers, however, we did not ultimately execute an EU and Storm went into administration.
“Unfortunately Storm has exaggerated this as an excuse for what went wrong.”
SICAG has more than 1500 active members.
