Bank of Queensland settle Storm Financial cases – The Adviser

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Bank of Qld’s profits will be hit by more than $22 million after it reached a settlement with ASIC over the Storm Financial collapse.

The bank announced yesterday that it had resolved both of its outstanding Storm Financial proceedings, subject to Federal Court approval.

The two proceedings are ASIC’s unregistered managed investment scheme proceedings, which started in Dec 2010, and a class action, which started in Dec 2012.

Storm Financial was a financial advice company that entered administration in 2009.

ASIC has been investigating a range of issues relating to the affairs of Storm Financial, including investment home lending, margin lending and related advice. The investigation started in Dec 2008 and is ongoing.

ASIC said the agreement with BOQ concluded its existing litigation to obtain compensation for Storm investors, following a payment of up to $136 million by CBA and a payment of $75 million by Macquarie bank.

BOQ said it would make a gross payment of $19.7 million to settle ASIC’s proceedings and the class action, with $17 million of that to be paid to its customers.

The net impact after tax will be $22.1 million, which includes all legal costs and an additional provision for remediation costs.

These payments will be reflected in BOQ’s 2013/2014 results, which will be released on Oct 9.

ASIC said the BOQ settlement would return about 45cents in the dollar to each investor or investor group involved in the deal.

The settlement agreement includes acknowledgement by all parties that BOQ denies any wrongdoing in relation to both proceedings.

Acting chief executive John Sutton said the bank was pleased to have resolved the long-running issue and would now work towards providing certainty to the customers who were involved. “Eligible customer will be contacted by the class action lawyers in the coming months”.

John can be contacted on 0749722081 or 0410433919.  or email him at jwhitten@ihl.net.au or net www.ihl.net.au. John Whitten is a credit representative (CRN 399796) of BLASSA Pty Ltd (Australian Credit Licence No 391237).