Storm clients in advice vacuum
In the event that Storm Financial does not emerge from its current state of voluntary administration there is a risk that up to 14,000 of the group’s financial planning clients will be left without advice.
It appears at least 350 of these clients will be in serious financial distress, and likely involved in legal action currently being prepared by Slater & Gordon and Townsville firm Connolly Suthers.
Of Storm’s 14,000 clients across the eastern seaboard, the Australian Securities and Investments Commission (ASIC) estimates that 3,000 of them have margin loans for share market investments. Then there are the 11,000 clients who do not have margin loans. These clients are not currently forming part of ASIC’s investigations.
It is understood that Storm can currently provide information to its clients on their financial position, but it cannot provide them with advice.
Whether Storm will be able to continue to advise its clients in the future will be a decision made by the voluntary administrators and ASIC. With hundreds of cases of legal action pending between consumers, the dealer group and Australia’s biggest bank, the Storm problem is unlikely to be resolved quickly.
In the meantime, share markets continue to be volatile and many of the group’s clients will be heading closer to retirement, all without the benefit of advice.
The voluntary administrators of Storm Financial, Worrells Solvency and Forensic Accountants, began their investigations yesterday, while a notice of motion between Storm and Commonwealth Bank of Australia (CBA) was before the Federal Court in Brisbane yesterday afternoon.
Media reports this morning suggest that CBA is considering seeking to have receivers appointed to the company.
ASIC is now waiting on a report from the administrators before considering what action it can and will take against the group.
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