Storm clients remain wary Cautious welcome for banks probe
FORMER clients of failed Storm Financial have welcomed plans for a royal commission into the financial services sector but fear another whitewash is in store.
For some the rage still burns over the failings of the corporate regulator as much as for having the banks deny all blame in being involved in a flawed investment strategy.
About 3000 clients, many from North Queensland, lost share portfolios worth a total of $ 3 billion when the sharemarket crashed in late 2008.
The Commonwealth Bank froze the indexed funds amid the panic, failed to provide margin calls so investors could at least maintain their position and then sold them out at the market nadir when most were in negative equity.
Investor and retiree Mark Weir, who has headed the Storm Investors Consumer Action Group, said investors to the “last Storm client s t a n d i n g ” would likely say there was a compelling need for a royal commission.
“( Investors) will not be rejoicing but there will be some satisfaction,” he said. “We definitely need to get the balance right between the needs of shareholders and investors.”
Mr Weir said banks needed to be held to account for providing the lending for an investment strategy that was illsuited to the needs of people in or near retirement.
“They did not show any restraint in lending money to people in that age group,” Mr Weir said.
He said the Australian Securities and Investments Commission needed to share some of the blame for the focus on Storm Financial rather than the role of the banks.
Former investor Steve Reynolds lost most of his life’s savings and his family home when his investments evaporated in 2008.
Mr Reynolds said it appeared they would be “done over again” with Prime Minister Malcolm Turnbull siding with the banks.
“He will be able to limit the terms of reference to stymie the scope of the investigation as well as hand pick a sympathetic royal commissioner,” Mr Reynolds said.
He said his “very cynical view” came from dealing with the banks and politicians during the Storm debacle.
“A royal commission called by the other side of politics may even have helped some bank victims but I expect nothing from this one,” he said.
He said even a passing glance at the way banks, including the Bank of Queensland, provided low doc loans to financially illiterate victims of Storm would be a good start. Financial inquiry we had to have: page 39