The Storm Investors Consumer Action Group (SICAG) has called on its members to seek external legal advice and extensions on their Commonwealth Bank of Australia (CBA) compensation offers as news of member acceptance due to duress and desperation begins to emerge.
SICAG joint chairman Mark Weir said there is widespread “disaffection” among ex-clients of the fallen financial advisory firm over the acceptance of the bank’s compensation offers.
“The fundamental spirit of the resolution scheme that would seem to be promoted by Slater & Gordon and the bank is that this is as good as you would have got out of any conventional court system and that you should consider taking it,” Weir said.
“We would hope that people are not accepting those offers out of desperation, and we fear that may be the case because they feel they don’t have any other options.
“If this disaffection that is being displayed is sustained and it can be concluded that the resolution scheme is a failure it would be a tragedy.”
He said SICAG will 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,” Weir said.
He said SICAG will begin active contact with its members to note down the reasons behind whether they have or have not accepted the CBA’s offer.
In a statement, the CBA acknowledged ASIC’s comments on Storm client compensation, stating the corporate 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,” the statement said.
Late last week, ASIC was set to begin confidential compensation discussions with individuals and entities involved in its investigation into the collapse of Storm.
