The Brisbane office of law firm Slater & Gordon is preparing legal action on behalf of more than 230 Storm Financial clients.
Slater & Gordon practice group leader, Brisbane, Damian Scattini, said the firm was looking at various forms of action, including a potential class action, on behalf of an ever-increasing group of Storm clients, who are “still coming in the door”.
Scattini said that in each case there will likely be a number of defendants, with the group’s entry into voluntary administration unlikely to affect any insurance options available.
“There’s plenty of culpability in this case to go around, unfortunately,” Scattini said.
Slater & Gordon will be examining whether or not the advice given by Storm was tailored to clients’ individual requirements, using the Statements of Advice issues to clients, as well as verbal advice, as part of the evidence.
“We should be in a position to launch an action within a couple of weeks,” Scattini said.
Scattini said the action would be taken with the aim of putting Storm clients “back in the position they would have been in but for the negligent advice … but, of course, nothing ever compensates for the heartache and stress”.
Meanwhile, Colonial Geared Investments, the provider of some of the products used by Storm, is now footing the bill for impartial advice being offered to Storm clients, facilitated through the Financial Planning Association (FPA).
“Arising from its concern at the position of the Storm customers, Colonial Geared Investments has arranged with the Financial Planning Association for affected customers to obtain independent financial advice and Colonial Geared Investments will meet the cost of this consultation,” the bank said in response to an enquiry from Money Management.
The advice is speculated to be around $250 for each initial consultation. The FPA stepped in to help facilitate advice for Storm clients facing margin loans, when it became apparent that clients were receiving different information from the financial planning group and the product provider.
The inconsistency in the instructions being given made clients confused about what to do next, FPA chief executive Jo-Anne Bloch said.
Bloch said while Colonial has offered to pay for the cost of the initial advice, some FPA members are providing advice on a pro-bono basis.
“Some are going to request payment because in some cases the advice has actually been fairly complicated and fairly detailed,” Bloch said.
Storm Financial is a principal member of the FPA. The financial planning firm has around 30 employed advisers and a handful of authorised representatives. Bloch said while very few of these planners are members of the FPA, Storm does have a small number of Certified Financial Planners on its books.
Bloch said the FPA is in the midst of a formal investigation, which will continue despite the company entering administration.
Updates and more information regarding this story will be available at www.moneymanagement.com.au throughout the day.
