Bank of Queensland customers involved in a joint class action case with the Australian Securities and Investments Commission (ASIC), relating to the collapse of Storm Financial are set to receive a share of a $19.7 million settlement announced by the bank today.
The settlement, which is subject to Federal Court of Australia approval, is set to conclude the remaining proceedings against the bank in relation to Storm, including ASIC's unregistered managed investments scheme proceedings, which commenced in the Federal Court in December 2010, and a class action which was brought before the courts in December 2012.
In a statement to the Australian Securities Exchange (ASX), BOQ said the gross payment in relation to the two proceedings would be $19.7 million, with $17 million to be paid to the bank's customers.
"The net impact after tax to BOQ will be $22.1 million, which includes all legal costs and an additional provision for remediation cost," the statement said.
The bank said the settlement will be normalised in the determination of cash earnings for BOQ's results for the year ending 31 August 2014.
BOQ acting chief executive, Jon Sutton said, "We are pleased to have reached a resolution to this long-running issue and will now work towards providing certainty to the customers who were involved".
"We have worked closely with Storm customers over the last five years and will continue to consider their individual circumstances," he said.
"Eligible customers will be contacted by the class action lawyers in the coming months and will have the option of accepting a settlement payment or staying on their existing repayment arrangements."
This settlement with investors and ASIC follows a smaller out of court settlement of $1.1 million made in May last year in which BOQ was one of three parties who fully compensated two clients for Storm related losses.
The other two parties were Senrac and Macquarie, with the three groups settling with ASIC for a case brought by the regulator on behalf of a husband and wife who had invested in Storm.
At the time ASIC chair Greg Medcraft said the case was brought to hold the banks accountable for their role in the losses suffered and to establish a basis upon which Storm investors could receive compensation.
"The settlement provides a certain compensation outcome which ASIC considered preferable to awaiting judgment in its proceedings and possible appeals," Medcraft said.