Pressure builds in Storm Financial resolution scheme
The Sydney law firm bringing a class action against the Commonwealth Bank of Australia (CBA) on behalf of Storm Financial clients has asserted the bank is trying to exclude the firm from participating in the resolution scheme being jointly run by the CBA and Slater & Gordon.
CBA has been working with national law firm Slater & Gordon on a resolution scheme which sees former Storm Financial clients given compensation in return for signing strict confidentiality agreements that preclude them from publicly discussing the settlements or making complaints to public authorities, including the Australian Securities and Investments Commission.
Levitt Robinson recently announced it had launched a class action against the bank that would seek to prove the relationship between CBA and Storm Financial was an unlawful managed investment scheme.
The group has now told its Storm Financial clients that earlier this month the Commonwealth Bank of Australia (CBA) "purported to terminate its agreements" with Levitt Robinson, "thus attempting to stop us from representing borrowers in the CBA Resolution Scheme".
Levitt Robinson has since referred the matter for dispute resolution within the scheme and said it would also contest the matter in court, within the next week if necessary.
However, the group said it believes the CBA's actions to be "unlawful" and expect they would be reversed before the end of this month.
"If, by Wednesday 28 July, 2010, Levitt Robinson have not succeeded in defeating this move by the CBA, then we will arrange for you to obtain alternative representation within the scheme by a firm aligned to ourselves. Alternatively, you may wish to withdraw from the scheme," the letter stated.
The firm, led by principal Stewart Levitt, also raised questions about the nature of the relationship between CBA and Slater & Gordon, in particular whether the law firm could be seen to be "speaking for" the bank, and whether the relationship between the law firm and the bank could be viewed as a "partnership or joint venture agreement … similar to what has been alleged existed between the CBA and Storm Financial".
The group said recent statements by Slater & Gordon were exercises in "frightening borrowers" concerning their loans with the CBA whereby the bank itself could not be seen to be "crudely and publicly exerting pressure on borrowers to accept unfair offers".
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