Despite early claims the bank and litigation firm Slater & Gordon negotiated compensation outcomes or deals for the 1200 victims of the collapsed advisory firm in the best interest of the clients, question marks are starting to appear over whether clients should in fact accept the deals.
Last week, ASIC emerged from a considerable period of silence over its investigations into Storm.
In a circular to the industry, the corporate regulator said it planned to enter into confidential discussions with parties associated with Storm. It is hoped the discussions will lead to commercial compensation outcomes for Storm clients.
The regulator also pushed for clients to not rush into accepting CBA’s offer, but where appropriate apply for extensions on their 28-day thinking time and seek independent legal advice on their options.
In the past few weeks there has been concern that clients were accepting the CBA offers based on desperation and duress.
Sydney-based barrister Ross Goodridge has also taken a stand for clients’ rights, issuing a letter to members of the Storm Investors Consumer Action Group (SICAG) informing them they do have options.
In a copy of the letter obtained by IFA, Goodridge said he had spoken to more than 50 SICAG members who had approached him for assistance.
“The process and agenda appears to have been run for everybody’s benefit except for your members. At times, the members have received no information and contact, at other times they have been bombarded with legal documents and a demand that quick decisions be made,” the letter said.
“Recently, members have received a 20-odd page document from the Commonwealth Bank and lengthy legal explanations as to why one case or another may not apply.
“It has been reported to me repeatedly that the information coming to members appears as though it is coming from a sausage machine with the handle being cranked by the CBA.”
SICAG joint chairman Mark Weir said there was widespread “disaffection” among ex-clients of the fallen financial advisory firm over the acceptance of the bank’s compensation offers.
Weir said SICAG would follow ASIC’s decision last week advising Storm members to request an extension on their CBA offer.
“The advice given by the ASIC circular that people should not be in any hurry to accept a deal pending the outcome of their inquiries is sufficient reason for people to be seeking an extension and we’ll be in no hurry,” he said.
SICAG would begin active contact with its members to note the reasons behind whether they had or had not accepted the CBA’s offer, he said.
In a statement, CBA acknowledged ASIC’s comments on Storm client compensation, stating the regulator’s approach supported its own view that a commercial resolution for Storm clients was preferable to protracted litigation.
“The bank has said repeatedly that it would put things right where it had done wrong and it believes its Storm resolution scheme is at the forefront of assisting customers affected by the collapse of Storm Financial,” it said.
