We never asked to go into the stock market, we asked for financial advice. When we were told how much we could borrow as a home loan we voiced our concerns to storm and to others, we were told 'this is how financial planners invest today and it is tax effective.' We were paying so much PAYE tax that I was virtually working for nothing.
Once we agreed to this financial advice we knew we were taking on a loan for a little over half a million and we only found out about the margin loan, for another half a million, after the collapse and were horrified that we had a second loan. In hindsight we should have been aware of it but we weren't. We can certainly accept our share of the blame for that but we were never made aware by storm that we had a second loan. I thought we may have been the only one but since asking other stormies I have found out that this in fact was a common occurrence. I would have asked about margin loans if I'd known what one was, I had never heard of them. Storm may have assumed we knew, we didn't, and I believe that they deliberately down played the margin loan issue.
As far as the loan commitments were concerned we were told not to worry about the debt, not to worry about anything associated with the debt just leave it all up to storm and we did. The common thread running through all the submissions to the parliamentary inquiry tell us the same thing was told to everyone irrespective of where they lived so the advisors were well drilled by their boss. They appeared to be a very successful company who knew what they were doing. We asked our advisor what qualifications he had, he was well qualified. I think I've said this before but Storm were members of the FPA and ASIC approved. The FPA and ASIC obviously supported storms strategy or both of them would have done something about it long before this collapse. What else do you ask?
I thought I had done enough research before investing with these people. I asked storm investors who had been with storm for some time, saw a lot of extremely clever people at the storm seminars they were very happy with their investment and recommended storm. I know other stormies who asked accountants and others who were recommended to storm by their banks. I was told that accountants couldn't give financial advice - is this right? Who would you have gone to, to find out more and what other research would you advise that we should have done?
I asked another financial planner after the collapse if we should have asked a lawyer and he said 'why there was nothing legally wrong with their paperwork it wouldn't have helped.' I do agree that we should have asked someone else to explain their strategy to us but I still don't know who we should have asked. It's time to clean up the financial planning industry if it's ever going to be viable, so many have become quite disillusioned with them. I now know others who have been through the same thing with other planners and said 'you should have asked me I would have told you never to trust one, don't trust anyone with your money' Wish I'd asked them before I went to storm.
I would never take on this level of debt again, for many of the reasons that you have all said, yet I know a couple who have repaid their debts and are now going back into the market doing the same thing and this couple were one of the people who I asked, they recommended it, are very astute business people and believe that storm did nothing wrong. They do believe that the Cassimatis' haven't done the right thing but say the advisors are not to blame for this, they honestly believe in storms strategy. They blame the CBA totally for this collapse and have explained to us why they believe the CBA are totally to blame and it makes sense to me. Who do you believe? They have done extremely well and knew the risks, accepted them and can afford to commit to this level of debt. They have told me that they should never have allowed those who cannot afford it to get so far into debt.
In the past when a client reached margin call the banks sent out a letter advising clients and storm that they were in margin call and giving them five days to correct their LVR's. Why didn't they do the same thing this time? The bank say they don't have to. Have the banks rules changed since 2003 and if they have why didn't they tell storm or their clients that they have changed their rules? Clients were never advised this time but the banks say that they did advise storm. Who do you believe. It is vital that this is sorted as the banks sold everyone down at the worst possible time and suddenly there was 72 million super cheap shares on the market. Who bought them? Many believe there is insider trading involved. What does everyone else think?
Why did the CBA lend Storm Financial so much money and why did they demand it back in 24 hours thus forcing Storm into receivership? Was there a good reason for doing this and if so what was it? Had they supported storm through this difficult down time none of this would have happened. The CBA stayed very close to Storm Financial when they were doing well but as soon as things started to get a little dicey they dropped storm like a hot potato and all it's clients with it leaving them all dead in the water. Something smells really badly there. What are your thoughts?
I hope this parliamentary inquiry gets to the bottom of exactly what did happen. The banks have been protected for far too long in this country and it's about time they were brought to task for their irresponsibility in lending anyone money if they cannot afford it, and as much as I hate to now admit it, you're right we have to accept our share of the blame as well I guess. My only comment there is we were told that we didn't have to worry as the experts would take care of everything and we would eventually be self supporting and we believed them - our biggest mistake. We were told we wouldn't make anything for about five years. If the bank hadn't foreclosed on storm when it did this prediction may very well have come true. Who knows, I certainly don't.
The margin loan issue is the big one here and there is very little legislation at present protecting those who cannot afford to have a margin loan but hopefully those who do understand the margin loan concept, want to continue to have one and can afford it can still apply for one as before. I don't know exactly what this legislation involves but something needs to be done to protect those who cannot protect themselves without affecting those who can.
You're right there were many many storm clients who wanted to be cashed up long before the crash and storm would not do it, why, because they would then be losing money, it was all about money in the end, when it should have been about the clients. Storm and the banks all knew this crash was a possibility, we could all see what was happening in the US early in 2008, and we all knew the market was dropping, it was never a matter of if but when. I know many who were told 'don't follow the herd' when they wanted to take their money out of the market. Storm should have been doing that anyway if they were doing their job properly. They weren't and we are all aware of it.
I have found it very hard to blame ourselves when we thought that we were paying storm to take good care of our finances for us. I blame myself every day for trusting them as they have destroyed so many of us financially and emotionally. They say what doesn't kill you makes you stronger and we might be dead financially but in other ways we have much to live for and if anyone out there in forum land has any great ideas on how thousands of ex stormies with no money and no home can get ahead and prosper don't keep that info to yourself....share it around a little.