More than 50 clients of collapsed financial services firm Storm Financial have reached a settlement with Commonwealth Bank, which lent the Storm clients money to invest.
But the settlements came amid allegations that Storm did not pass on margin calls to its customers as sharemarkets plunged last year.
The 50 settled claims are just a small portion of the hundreds of claims against Storm and the various banks it referred clients to, but they are the first to be resolved through a special dispute resolution process set up by law firm Slater & Gordon and Commonwealth Bank.
Slater & Gordon practice group leader Damian Scattini says that while the details of individual cases will be kept confidential, agreements include reducing loan sizes, cutting interest rates and repayment obligations and waiving fees.
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“It is reassuring to see the CBA act in good faith and we call on other banks to take a similar approach,” Scattini said in a statement.
The settlements come as fresh questions are raised about why Storm clients were not warned that the value of the portfolio compared to their size of their loans had fallen to dangerous levels.
According to a report in the Sydney Morning Herald, Macquarie Bank said 1,000 margin calls it issued to Storm clients via the financial services company in October last year were never passed on.
Exactly who had responsibility to informing clients of these margin calls – Storm or the banks – remains perhaps the biggest point of contention in the Storm collapse and is likely to have a huge impact on future legal settlements.