More Old Articles from the front page.

BoQ has week to respond to draft

Andrew Fraser | August 14, 2009

THE Bank of Queensland has been given until next week to respond to a draft legal action initiated by former customers of troubled finance group Storm Financial before formal legal action begins.

While the Commonwealth Bank has admitted some of its lending practices were at fault in the Storm Financial case, BoQ has been accused of acting in a similar fashion.

But the bank has strongly maintained there were no faults in its lending practices, even though many of the loans made by Storm Financial were processed through Townsville's North Ward branch of the bank.

The only bank branch that processed more loans was the CBA's Aitkenvale branch and two managers who were overseeing the activities of this branch have been sacked.

In contrast to the way the CBA has handled the issue, BoQ is unlikely to respond to the statement by lawyers Slater & Gordon, on behalf of the Storm Action Group.

Last night, the CBA held the first of its information meetings around the state to give former investors an outline of proposed settlement packages.

Information Evening with Slater & Gordon

The first meeting was held last night Thursday 13 th August 2009 at the Southern Cross College Community Hall at Scarborough and was attended by more than 500 and overwhelming result for the Sicag Committee and value of meeting to members worth more than the price of admission .

It enabled us to give an update on what the committee has been doing on several fronts before Damian Scattini of Slater Gordon spoke about the developments with negotiations & contact with other Lenders involved other than CBA and pending legal battle with the Bank of Qld. Members where then able to fire away with numerous questions from the floor regarding the process.

At 8.00 we had a coffee break before the 2^nd part of meeting for CBA/CGI Clients

Damian’s colleague Ben Hardwick then went through the mechanics of the CBA Resolution Scheme with a power point presentation followed by a question time.

At this point we introduced Brendan French, General Manager Customer Relations CBA & Matt Comyn Executive General Manager Equities & Margin Lending.

At 3.00 pm on the Thursday the Sicag committee had contact with the Bank and suggestion made that both gentlemen could catch a flight from Sydney and be at the meeting by 8.30 pm if we thought this would help the Sicag communication of CBA Resolution Scheme. An offer we could not refuse and totally unexpected but it worked brilliantly. Without coats & ties and speaking from the heart all present could see that the CBA is sincere & genuine with its resolution process and many assurances given that the some of the bad experiences members have had with past dealings will not continue . Members were asked to channel requests via Sicag and they can address the problems . The attitude change to Storm people has already started. Both guys then took questions from the floor, and took onboard the fears & concerns of many regarding the CGI problems being included in the resolution matrix. We have invited both Brendan & Matt to join the Sicag/Slater Gordon roadshow but cannot confirm if this will be possible .

The committee has always endeavored to maintain a high standard with dealings with the banks and we are respected as credible and representative of the 1500+ members. The communication that we now have will enable a lot of people to be able to move forward and trust the other banks also see the light with mediation rather than litigation.

Bank refusal causes Storm

TONY RAGGATT

August 11th, 2009

BANK of Queensland has caused outrage by failing to lodge a submission to a federal parliamentary inquiry about its involvement in the Storm Financial fiasco.

Customers yesterday accused the bank of being 'gutless', while inquiry chairman federal MP Bernie Ripoll confirmed the bank would be forced to appear before the inquiry if that was what was required.

''We want to get them to the table and there's an expectation that will happen,'' Mr Ripoll said.

''We have no power to compel them to make a submission but when it comes to public hearings we have other powers and options. ''l will confer with the committee on how we do that process.''

The committee can seek a writ from the courts to compel bank representatives to appear by subpoena.

Mr Ripoll said he was very disappointed the bank had chosen not to lodge a submission to help its inquiry into financial collapses such as Storm Financial.

Submissions closed on July 31 and public hearings will begin soon.

Mr Ripoll said the committee needed the fullest information from all players to make the best possible recommendations to Federal Parliament.

Bank of Queensland has been in denial about its involvement in Storm for months.

In June the bank was forced to correct a statement made to the Australian Securities Exchange, one day denying it was being investigated by regulators the Australian Securities and Investments Commission over its involvement in Storm Financial and the next day confirming that was the case.

The bank's North Ward branch was a key conduit for Storm, lending more than $20 million a month at the height of Storm's popularity in 2007.

WHAT WE SAY

Thousands of clients were financially destroyed with highly geared sharemarket investments, launched with borrowed funds secured by mortgages on their homes.

In the case of Bank of Queensland, funds were gained for some of Storm's most fragile clients, the elderly and pensioners, with the use of low documentation loans normally used for lending to business owners.

Property data shows the branch's owner-managers Declan Carnes and Matthew Buchanan benefited significantly from the lending.

They went on a spending spree in the four years leading up to the Storm collapse, amassing about $10 million worth of industrial and residential land, flats and houses inTownsville.

Bank of Queensland is also facing legal action on behalf of clients by law firm Slater and Gordon.

A draft statement of claim was sent to the bank last week on behalf of one client saying that if the bank did not agree to meet to resolve the client's claim within 14 days, proceedings would be commenced.

While the bank has said there was no evidence of improper or dishonest practices, the draft statement of claim sets out allegations including breach of contract and negligent and misleading, deceptive or unconscionable conduct.

It seeks a number of remedies including damages and an order that the loan contract be declared void.

CBA admits fault on Storm Financial client loans

17 June 2009 | by Lucinda Beaman

Ralph Norris

The Commonwealth Bank of Australia (CBA) has issued an apology regarding its involvement with the clients of failed financial planning group Storm Financial.

A statement issued by the bank said it acknowledged that while the circumstances relating to some clients of Storm were "not caused directly by the bank", they did involve the bank to "some degree".

Commonwealth Bank chief executive Ralph Norris said the bank had identified "shortcomings in how we lent money to our customers involved with Storm Financial.

"We are not proud of our involvement in some of these issues and we are working toward a fair and equitable outcome for our affected customers."

Norris said that those affected "can be assured that where we have done wrong, we will put it right".

"I am committed to the identification and resolution of all issues relating to the bank's involvement with Storm Financial," Norris said.

The statement, which the bank issued to the Australian Securities Exchanges, said the bank would meet its obligations to customers who are in financial difficulty "as a result of any shortcomings identified in the bank's lending practices".

The bank said it would "immediately suspend repayment obligations until 31 August 2009 for all loans made to customers in relation to Storm Financial".

The statement also said that any settlements already reached between the bank and some customers would not preclude them from having their situations reviewed and improved, if that is what it takes for the bank to meet its obligations.

CBA will also stump up the funds to cover the costs indepenent legal and financial advice for those affected.

But Norris pointed the blame for the losses incurred by the clients firmly with the financial planning group, saying the bank was not responsible for the advice provided by Storm.

"That was clearly the responsibility of Storm Financial, a licensed financial advisory company," Norris said.

The statement from the bank said it is continuiung its discussions with the Australian Securities and Investments Commission regarding the matter.

The statement from CBA said it would "learn from the mistakes made in relation to Storm Financial customers".

"We will do everything possible to ensure that they will not recur."

CBA said the Storm Financial issue involved around 2,500 of its customers. The bank said the financial impact on the bank as a result of this issue is not considered material, but it did acknoweldge the "impacts for customers are more than financial".

What’s still relevant ...

Apart from a lot that has been widely reported in the media, the SICAG committee continues to work towards fair and equitable compensation outcomes for all SICAG members.

The Worrell’s enquiry has been taking some of the lime light of late and has revealed publically a lot of what we already knew.

It should not be a surprise to anyone that the BoQ has continued to deny any wrong doing and is constantly revealing their ignorance through obfuscations and prevarications that continue to amaze all but the most cynical observers.

BoQ CEO David Liddy claims ignorance and or knowledge of margin lending products.

Liddy claimed at the Ripoll enquiry that BOQ does not offer margin loans and doesn't understand the workings of them. This is untrue as BOQ did offer margin loans (through Macquarie) and he himself recently offloaded 45% of his bank shares as part of a sophisticated margin loan facility.

Further, in a 2006 press release:

Monday, June 05, 2006
BOQ intends to position itself as a serious player in the growing margin lending market, kicking off with a market-leading fixed rate offer.

The streamlined 12-month BOQ Margin Loan offers a new benchmark pre-paid fixed low interest rate of 6.99%.

BOQ Head of Marketing Mark Franzmann said the Bank was using the launch of the new product to target new business.

“The reason we can offer this rate is that all business we generate is new business, it really is a one-off opportunity.

Go figure!

Furthermore, if you would like to know more about current BoQ margin lending products you can find that info here

On another front, SICAG believes that head of Colonial Geared Investments, John Clothier has been let go. Media reports in recent days have also revealed that Kamal Arnaout has also been sacked ... Most commentators believe that he has been marked as a scapegoat.

On the SICAG committee front, there has been more going on in the background in terms of new and additional alliances being formed ... We’ll report more as time and timing prove appropriate.

The CBA Resolution Scheme is starting slowly at present with some CBA offers being received by Slater & Gordon.

These offers will have to be scrutinised and evaluated in line with the resolution process rules and guidelines. We all wait with bated breathe to see the outcomes.

Graham Anderson has been doing a great job with the newsletter updates. We trust that all our members are kept well informed.

If you are a SICAG member and are not receiving these updates, please send us an e-mail so that we can check your e-mail address details in our database.

IF you aren’t a SICAG supporter ... WHY NOT?

We just had a call from Damian. (29.11.2009)

He can’t say too much about today’s proceedings for obvious reasons but he was able to tell me:

· Our case was put forcefully by Mr Bell SC, one of the country’s leading legal brains (to quote Damian: “This guy can move furniture with his brainwaves.”)

· The CBA have very strong legal representation as well.

· The parties (S&G, CBA and Determination Panel) have agreed to meet again on Thursday.

· The parties will issue a joint statement tomorrow morning (Monday).

· Damian did not attend the Determination hearings today; he was tied up with the Bank of Qld lawsuits,

Damian asked me to pass on his thanks for Mark’s “good luck” message and the support of the SICAG group. He also assured me that he and his firm were working very hard on achieving a just and equitable outcome for Storm investors, despite the naysayers who have been active in the forums and elsewhere. We (SICAG) have assured him that he had the full confidence of the SICAG executive and the vast majority of Stormers.