Storm Financial Group

Wow

Big couple of days on the forum.

Frank, appreciate all the extra information you are posting, but as I read the submission from Brett Walker and also based on all your examples from the SOA all roads lead to Storm Townsville.

Can I mention a couple of points. I have a client that received an inheritance, she paid out her home and has a lump sum that generates an income of roughly $60,000 per annum. If she were to approach the bank and ask for equity, she could quite reasonably expect the bank to offer her terms based on the income she earns even if it is from investments. Now if she were to invest the borrowed money it might generate more income which in a couple of years she could prove via tax returns and potentially approach the bank and take her equity withdrawal all the way up to 80%. Is this illegal? I would think that the bank would consider it ok as it would meet their lending criteria. If she chose not to invest the money but instead heads to the casino, is that the banks fault? My logic says Storm managed to convince certain bank managers on the logic above and therefore also convinced them to speed up the process and let them go straight to 80%. Legitimate lending for those with an income like my client, bad lending for those who did not have any income except the income from the “supposed” new investment.

We also all need to remember that banks are in the business of lending. Without it as we saw in 2008 the whole shebang stops rather suddenly. Not excusing bad lending, just saying we need them to lend.

Where I see massive issues are the lending to those with little to no “legitimate” income sources and also in the desktop valuations that allowed more equity to be drawn from the home as well as topping up the margin loan. This was a fee grab by storm as discussed but if it can be proven the valuations were not legitimate then damn right there should be forgiveness of that debt and any attached margin loan exposure that resulted.

So potentially some of the lending was legitimate. Storm draws out a couples super holdings, pretends like they have been invested for ages and assigns an income to them. They use that income figure to them draw on the home.

Now we have an asset base and an income stream. We have the assets and we have income that is either a mix of wages and investment income or maybe just pure investment income. So they approach the margin lenders. As already discussed, nothing illegal on that front as it is a product that just needs to have equity to back it and we have plenty of assets now.

Frank, I was surprised to see you quote that the banks are a law unto themselves and they set the conditions and you follow them or else. Of course they do. And rightly so. They are lending other peoples savings and have a responsibility to those depositors. You should never have expected them to cover anyone else except themselves.

On the margin calls – my latest understanding is that Townsville HQ stopped individual advisers at the local levels from addressing the margin calls directly with clients until after they had tried to renegotiate the terms with CBA. EC must have still been under the assumption the banks were his friend. But yet again a case of Storm HQ needing to have everything centralised so EC could make all the decisions.

HQ – It is a pity you are scarred so. 99% of planners got their clients through the crisis, some with papercuts, others with flesh wounds but they are still fighting. As I mentioned earlier, the real value is added through strategy and technical knowledge, if you struggle with markets then the rules Govt’s put in place are even harder.

You also mention the promise to monitor things. This is where Storm dropped the ball. They knew what the investments were worth, they knew what the loans were. They could have easily on the bank of an envelope done LVR calcs. They chose to stay in the market and convince all clients to do so. I am yet to meet someone who asked to be sold out and wasn’t convinced to do otherwise by the advisers. What happened to the cash “dam”? Wasn’t this supposed to be a last resort “save our souls” allocation of cash? When was it used?

Can either you or Frank comment on whether they used a idea of “exponential” growth as an argument. That technology etc meant “this time it is different”? I heard that used a couple of years before it blew up. It was a way of explaining the bull run rather than say it was well over the average and would probably correct.

I do look forward to some of this getting to court. I think both the lenders and I certainly hope the Storm strategists get pulled up on what are some glaring holes.

Julia said:

Oh dear, no one is denying former clients their bitterness rights.
I am simply pointing out that it is absolutely unreasonable for any of them to claim that they were "duped by the entire industry".

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I agree and I was simply pointing out that it was reasonable response for them to feel bitter.

Julia said:

And, on bitterness, We have a choice about whether or not to hold onto bitter, aggrieved feelings. Most of us will have experienced injustice and the ramifications of the bad behaviour of others at some point in our lives. After a period of anger and grief, it's usually more healing to let it go. At least, so I have found.

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As have I, in circumstances a tad more stressful than the loss of mere money. But others are not you or I so they have to work that aspect out in their timeframe and in their manner.

Julia said:

Well, Judd, I don't know anyone who hasn't so planned. It's a pretty basic thing to do. And if people haven't, then they have only themselves to blame. Surely you'd think about this just as you'd budget for every other phase of your life.

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Does that include well educated friends whose eyes glaze over when you mention financial matters to them or those youths who you attempted to tutor on such issues? I am not going to bother to get into a flame war about it as it is simply not worth it. You have your view and I have mine.

Julia said:

What's the basis for suggesting the average Australian is too stupid to think for themselves? It takes about 15 minutes to add up various non-discretionary spending e.g. rates etc, then think about what other funds you'd need to fund the sort of lifestyle you want. Hardly difficult.

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As above. It may be almost second nature to some but it isn't to others. Otherwise there would probably be little need for people to consult financial planners and that is not the case.

Julia said:

As above. Why wouldn't you just do your own calculations, rather than blindly accept what some newspaper article says?

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My point was about the power of advertising. It works. Read and digest what Harelyquin said about the (mis)information she and others were being fed from various quarters and that includes Storm.

Julia said:

Exactly. Which is why I object to HQ claiming she was 'duped by the whole industry'.

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I concur.

I feel sorry for former Storm clients. I do believe that to some extent they were the authors of their own problems but Storm Financial was the main culprit, especially when things were going down the toilet and not actively reducing their clients exposure irrespective of the impact on their fees. The banks will probably be shown to wear a portion of the blame as well. So be it. Had to laugh. One silk said of ASIC argument about unlicensed managed investment scheme "A novel approach." Apparently that is lawyer speak for "I'll be interested to see how they push this one up hill with a pointed stick." Litigation. Awful stuff. 48% win, 48% lose and 2% draw. Wonder which side of the coin this one will land; if it does.

Anyway off to do more important things for me than worry about somebody elses problems.

Frank Ainslie said:

"I too have also taken the time on this forum to explain our position, quoting details from our Storm SOAs to refute suggestions by some on this forum that we Stormies were all greedy and just wanted more. "

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Frank you haven't uncovered anything new here I am afraid. Your story is like so many I and others have read from the PJC submissions. Not sure what you were trying to prove here, but doesn't change my thinking one iota.

Frank Ainslie said:

It’s really a waste of time engaging such people in any form of discussion because they are just going to keep spouting the same line without a single shred of evidence to substantiate their mantra, “You were all greedy!”

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Same can be said for engaging people who blame everyone else for their situation but have not taken responsibility for the DECISIONS THEY MADE to blindly hand their lives over to a financial planner, without getting a second opinion on a strategy they clearly didn't understand form the get go, or even comparing the ludicrous fees. Thats a reflection of society today I guess...its always someone else's fault.

Frank Ainslie said:

Not one of these all-knowing individuals has once commentated on the Banks’ roles in all this despite what I have written in this regard. This alone tells us something about their thinking. They are simply not interested in getting at the truth.

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Not true, many have commented on the banks. And I doub't there are many here who are pro-banks. Just because someone says a strategy is endorsed by the bank, doesn't mean you just blindly follow.

But the fact remains, Storm sold you the dream, not the banks. Storm wrote the SoA, not the banks. Storm took their 7% fee and told you you wouldn't lose your house, not the banks. Storm told you they would monitor the market and protect you, not the banks. Storm recommended you increase your debt as the market rose, not the banks. Storm told you you would be fine when they knew you were going down the gurglur, not the bank.

You were screwed by Storm before the banks finished you off by not making the margin calls. A question, did the bank manager tell you NOT to do some thinking and investigating for yourself before placing your life in a strategy you didn't understand put forward by an adviser who was remunerated based on the amount of money you invested???? NO, THAT WAS YOUR DECISION Frank, noone else's.

Frank Ainslie said:

Their attitudes are really strange when you would think about it because they are not indignant at the thought that banking institutions in this country are capable of miscreant behaviour? Only at us for having invested through Storm. I can't believed that rational human beings would choose to completely ignore the facts and must therefore conclude that such people have a vested interest for adopting such an attitude.

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You know what's strange? That not one Storm client has been able to explain just what they thought they were paying 7% upfront fees for. You said financial advice. Well, that Frank, is as irrational as it gets.

Again, a reflection on today's society that we all look to blame someone else for the bad decisions WE MAKE. You have a vested interest Frank, and that is in getting compensation from the only party to this who has deep enough pockets to be able to pay it- the banks.

Frank Ainslie said:

As for me, I’ll keep on supplying my “screeds of stuff ”as someone put it in the hope that we still have some forum members left with an open mind.

That’s all we Stormies are really asking for really. People that will judge us on the facts and not on hearsay or people’s own personal prejudices. If they don't want to listen, so be it!

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The facts are you paid a ridiculous fee to a financial advice firm who you took on face value were experts in the field, to provide you with a strategy you did not understand, and fell for it hook, line and sinker. They are the facts you should be focussing on, becuase if you had have addressed them differently, you wouldn't be in the mess you are in.

And you still can't explain to me just what you expected to get for 7% Frank.

It becomes increasingly difficult to feel sympathy for people when they refuse to take responsibility for their own bad decisions.

I don't remember the word 'exponential' ever being used Doobsy, I have never heard the word before so even if it was mentioned I don't know if I'd remember or picked up on it. Can't be anymore help than that I'm afraid.

When I read your post it makes me realise how little I know about financial strategies and terminology so it's no wonder that we were caught out. We were just big fish heads getting caught in their net.

I do realise that banks are in the business of lending money but just feel very strongly that the banks knew more about the way storm were operating than they are admitting to. We've borrowed money from banks before and we had to provide endless details to them so that they could decide how much we could borrow and how much we could afford to repay.

This hasn't happened with their dealings with storm. A few forum members have said to us 'didn't you realise you were dealing with a rogue outfit, didn't you realise this and that' No I didn't realise they were this criminal but surely a bank working so closely with storm had to realise exactly how storm were operating. They deal and lend to other financial planners, they employ their own financial planners, common sense tells me that they were in bed with storm bigtime.

Like you I can't wait to see this played out in court. No one can go through what we've been through and come out the other end unscarred to some extent. I find that I feel nauseous just walking past the local cba branch and couldn't walk in if you paid me to. It's the same when we see 'financial planner' I get a knot in my stomach, groan and run in the opposite direction. I know there are good ones out there and I spent sometime in the early days going to financial planners for help but just couldn't go back and felt they were just trying to trap me with their financial knowledge rather than trying to help. One of them said to me 'you were just unlucky to walk through the wrong door', so I figure I won't bother going through any of their doors from now on, that's the best way to stay safe IMO.

Today I have no interest in going to a financial planner, I have sworn that I'll never walk into another bank as long as I live and have no bank accounts and that's the way I like it. I may never have a decent financial future but I'll never place my trust in another person when it comes to my finances. If our circumstances change I'll look into buying a few blue chip shares and dip my toes in the stock market a little at a time. Julia says its easy but I have had others tell me that it isn't so easy. I find that there's a lot of information on this forum that helps and I enjoy learning so I'll feel my own way no matter what happens.

Harleyquin said:

Julia I can't believe that you would recommend "investing in the most conservative fashion", by which,I assume you mean "in the bank",

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Again, you're making an assumption which is not correct. There are plenty of strategies which are much safer than that which you accepted, but don't resort to just putting money in the bank.

Banks pay roughly 3-4% interest, give or take a little each way.

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It pays to do some research from time to time. I have some term deposits at 8%.
At call cash at 6.51%.

If you were retired and drawing an allocated pension from your super, that income is tax free.

It's not up to me to suggest strategies. I'm not a financial planner.

You pay half this in tax (I say this from personal experience so know it to be true, but this will obviously depend on individual circumstances). Consequently, you are earning 1-5% on your capital and you have to live on it while keeping up with inflation. So effectively you are going backwards at a great rate of knots. Is this your idea of financial advice?

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Of course not. But you are basing this assertion on wrong assumptions.

HQ, much of my earlier offer to help you acquire a basic financial literacy was to help you understand this sort of thing. Fine that you chose not to pursue this, but as a result you are persisting with some quite wrong conclusions.

As others have observed, this thread is now going round in circles. You are seemingly unprepared to alter any of the views you've formed, even when it's explained to you that they are sometimes contrary to reality.

Perhaps by repeating the same things over and over, HQ, it helps you to feel better.
That's fair enough. I wish you all the best.

I thank everyone for taking the trouble to post on the subjects I have raised. However, until you start addressing the issues I have mentioned in relation to the Banks that dealt with Storm, I see no point in responding because you are all still focussed on Storm investors and what we did. It makes it seem as though you all are pushing an agenda of some sort.

In the hope that somebody actually addresses what the Banks have done (the BOQ would make a good start) I will keep on supplying the evidence. If you want to have any meaningful discussion with me, I suggest that you look at the issues I have raised in relation to these Banks and give me your objective opinions.

We, the people that invested in Storm, are not interested in your views about us. We are, however, interested in your views about the banks involved. Need I remind you that the Banks will be in the dock next year, not Storm's clients. It therefore seems logical to me that these Banks have committed wrongdoing, and there is evidence to support such charges. Why therefore is everyone fixated with what we did? Let's focus on what the Banks have done instead rather than continue to waste your time and ours by going over the same issues. It's getting us nowhere!

Thanks anyway!

Frank Ainslie said:

I thank everyone for taking the trouble to post on the subjects I have raised. However, until you start addressing the issues I have mentioned in relation to the Banks that dealt with Storm, I see no point in responding because you are all still focussed on Storm investors and what we did. It makes it seem as though you all are pushing an agenda of some sort.

In the hope that somebody actually addresses what the Banks have done (the BOQ would make a good start) I will keep on supplying the evidence. If you want to have any meaningful discussion with me, I suggest that you look at the issues I have raised in relation to these Banks and give me your objective opinions.

We, the people that invested in Storm, are not interested in your views about us. We are, however, interested in your views about the banks involved. Need I remind you that the Banks will be in the dock next year, not Storm's clients. It therefore seems logical to me that these Banks have committed wrongdoing, and there is evidence to support such charges. Why therefore is everyone fixated with what we did? Let's focus on what the Banks have done instead rather than continue to waste your time and ours by going over the same issues. It's getting us nowhere!

Thanks anyway!

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Maybe you could see it differently Frank, as an education for those who read this forum and are thinking of getting some advice, whether private planner or bank planner so they won't fall for the same thing you fell for.

I for one feel this forum should be just as much about making sure people are not sold a dud strategy as making sure they are careful about who from and how much they borrow.

Frank Ainslie said:

I thank everyone for taking the trouble to post on the subjects I have raised.

We, the people that invested in Storm, are not interested in your views about us. We are, however, interested in your views about the banks involved. Need I remind you that the Banks will be in the dock next year, not Storm's clients. It therefore seems logical to me that these Banks have committed wrongdoing, and there is evidence to support such charges. Why therefore is everyone fixated with what we did? Let's focus on what the Banks have done instead rather than continue to waste your time and ours by going over the same issues. It's getting us nowhere!

Thanks anyway!

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Hi Frank,

No wish to offend, but do you have the permission of "the people that invested in Storm" that you refer to in this post to make this statement?

I ask because I invested via Storm Financial, am a member of SICAG, and I do not recall you, or anyone else for that matter, asking me if I was interested in anyone's "view" of me.

Can I be 'cheeky' here and ask:

How many Storm investors do you actually represent?

How many Storm clients are involved in the current court case?

How many members are there in SICAG, and what propotion of them are represented by you?

How many of those members that you say you represent support your views, and have given you 'cart blanche' to speak on their behalf?

Would you be able to give us the numbers of members of your website forums and an approximate number of SICAG members so that we can see the proportion of SICAG members that you are actually "voicing the opinion of"?

I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?

I am not an advocate of the banks, but I am an advocate of 'absolute truth', and 'truth will out'.

You do many people a disservice when you say that you speak for all of them Frank.

I do not need you, or anyone else, to fight my battle with the banks for me.

You do not speak for me, nor do I need you to. Fight your own battle Frank, and let the rest of us fight our own.

MS

Mindstorm said:

Hi Frank,

No wish to offend, but do you have the permission of "the people that invested in Storm" that you refer to in this post to make this statement?

I ask because I invested via Storm Financial, am a member of SICAG, and I do not recall you, or anyone else for that matter, asking me if I was interested in anyone's "view" of me.

Can I be 'cheeky' here and ask:

How many Storm investors do you actually represent?

How many Storm clients are involved in the current court case?

How many members are there in SICAG, and what propotion of them are represented by you?

How many of those members that you say you represent support your views, and have given you 'cart blanche' to speak on their behalf?

Would you be able to give us the numbers of members of your website forums and an approximate number of SICAG members so that we can see the proportion of SICAG members that you are actually "voicing the opinion of"?

I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?

I am not an advocate of the banks, but I am an advocate of 'absolute truth', and 'truth will out'.

You do many people a disservice when you say that you speak for all of them Frank.

I do not need you, or anyone else, to fight my battle with the banks for me.

You do not speak for me, nor do I need you to. Fight your own battle Frank, and let the rest of us fight our own.

MS

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Tell me who you are and then I'll discuss this with you! I am not hiding behind an avartar! Why are you? If you are who you claim you are, why haven't you spoken up before? People on this forum have labelled Storm investors greedy! You have a strange way of fighting if the only time we hear from you is when someone is actually defending Storm investors against this type of attack. Frankly, your attitude makes no sense at all.

I suggest you either declare yourself or go away and have a good think about whose side you are on!

Incidentally, I have been fighting for Storm investors since this all began. I have written a book, have two websites, and have written millions of words to various parties including ASIC and the three principal banks involved. I also have my own discussion group called SOB which is made up of people who are also in SICAG. What have you done so far?

If you give me your name, I will gladly take you off my Christmas list. You do not sound like someone I would want to fight for anyway!

doobsy said:

Maybe you could see it differently Frank, as an education for those who read this forum and are thinking of getting some advice, whether private planner or bank planner so they won't fall for the same thing you fell for.

I for one feel this forum should be just as much about making sure people are not sold a dud strategy as making sure they are careful about who from and how much they borrow.

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Hi Doobsy,

In order to educate people, and warn them of the pitfalls that exist, using the Storm collapse as an example, you need to present the full story, not selected chapters. To do this, people in the financial sector need to understand fully what caused the Storm collapse. You cannot have a full understanding and complete the book until you come to grips with the part the Banks played in all this. Concentrating on the Storm model which we all know now was a flawed concept is only one part of the equation. You will only be giving any future investors half the picture if you continue to do this.

A "dud strategy" it certainly turned out to be BUT it was a strategy that was embraced by certain Banks who knew full well how Storm operated. I am now attempting to give the full picture. Whether you accept it and take it on board when advising any would be clients in the future is your choice. At least let us who were there tell the story! That surely is not too much to ask!

The best way to warn and educate people Frank is to tell them to do the very things you are conveniently ignoring...

* if you see an advisor, always get a second opinion;
* understand exactly what it is your fees are paying for and compare this to others;
* understand what it is you are investing in- don't just accept the words of your adviser, but do your own research;
* don't blindly follow "experts" because you think they know better than you; and
* understand the risks involved in your strategy. There is no such thing as a risk free investment.

People will get conned again, focussing on the banks is ignoring the real issue and won't help anyone avoid what you have been through, because more rogues will come along and take advantage of the gullible and greedy in the future. That much is certain.

Mindstorm said:

Hi Frank,

No wish to offend, but do you have the permission of "the people that invested in Storm" that you refer to in this post to make this statement?

I ask because I invested via Storm Financial, am a member of SICAG, and I do not recall you, or anyone else for that matter, asking me if I was interested in anyone's "view" of me.

Can I be 'cheeky' here and ask:

How many Storm investors do you actually represent?

How many Storm clients are involved in the current court case?

How many members are there in SICAG, and what propotion of them are represented by you?

How many of those members that you say you represent support your views, and have given you 'cart blanche' to speak on their behalf?

Would you be able to give us the numbers of members of your website forums and an approximate number of SICAG members so that we can see the proportion of SICAG members that you are actually "voicing the opinion of"?

I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?

I am not an advocate of the banks, but I am an advocate of 'absolute truth', and 'truth will out'.

You do many people a disservice when you say that you speak for all of them Frank.

I do not need you, or anyone else, to fight my battle with the banks for me.

You do not speak for me, nor do I need you to. Fight your own battle Frank, and let the rest of us fight our own.

MS

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+1

Frank,

I'm sure you have your agenda in mind when you post what you post, but I also resent your presumption to speak for everyone who invested in Storm. Not all of us share all of your views, and have not given you permission to assume we do. Not all of us feel the need to publicly "fight the good fight" and indeed there are many who would tell you that your posts on this particular forum are pointless. I'd be amazed if there were any contributors or readers of this thread who have not already formed a firm view of the "Storm Saga" one way or the other - we all view things and form opinions based on our own experiences, mindsets and personal biases - your tirades are unlikely to alter the opinion of those who are already predisposed to view "the people who invested in Storm" in a negative light, and will probably result in the opposite.

I certainly don't dispute your right to your own opinions, nor your right to post your own personal "truth". I do dispute your right to speak for those you do not know.

SJG1974 said:

The best way to warn and educate people Frank is to tell them to do the very things you are conveniently ignoring...

* if you see an advisor, always get a second opinion;
* understand exactly what it is your fees are paying for and compare this to others;
* understand what it is you are investing in- don't just accept the words of your adviser, but do your own research;
* don't blindly follow "experts" because you think they know better than you; and
* understand the risks involved in your strategy. There is no such thing as a risk free investment.

People will get conned again, focussing on the banks is ignoring the real issue and won't help anyone avoid what you have been through, because more rogues will come along and take advantage of the gullible and greedy in the future. That much is certain.

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It goes a little deeper than that for me, SJG.

I read most of the submissions to the Parliamentary Inquiry. One which really raised my hackles was that from a couple in their 70's, on Centerlink, home paid off and who wished to become "Self-Funded Retirees" (whatever that phrase means.)

Yep, they became double geared (actually triple geared in a way since companies, even those in an index fund, usually have debt and margin lenders lend against the equity not debt). How on earth could an planner advise this couple or similar couple, to embark on such a strategy?

Yes, they are entitled to seek advice to see how they could improve their financial situation but a competent person would gently appraise them of the fact that they have lost the most valuable asset of all to build income producing assets - time.

Naturally, politeness would prevent one from asking the obvious question of what did you do with the funds once you paid off your house, spend it or invest it?

To advise such couple to borrow, especially such large sums, is odious, despicable and contemptible in my view. And yet that advice was given before the specter of the big, nasty bank hove into view. You don't or shouldn't treat naive elderly people in that way.

Judd said:

It goes a little deeper than that for me, SJG.

I read most of the submissions to the Parliamentary Inquiry. One which really raised my hackles was that from a couple in their 70's, on Centerlink, home paid off and who wished to become "Self-Funded Retirees" (whatever that phrase means.)

Yep, they became double geared (actually triple geared in a way since companies, even those in an index fund, usually have debt and margin lenders lend against the equity not debt). How on earth could an planner advise this couple or similar couple, to embark on such a strategy?

Yes, they are entitled to seek advice to see how they could improve their financial situation but a competent person would gently appraise them of the fact that they have lost the most valuable asset of all to build income producing assets - time.

Naturally, politeness would prevent one from asking the obvious question of what did you do with the funds once you paid off your house, spend it or invest it?

To advise such couple to borrow, especially such large sums, is odious, despicable and contemptible in my view. And yet that advice was given before the specter of the big, nasty bank hove into view. You don't or shouldn't treat naive elderly people in that way.

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No doubt Judd, agree 100%.

There are so many things people should be aware of and have an understanding of when dealing with their finances. Frank focussing on the big bad banks ignores 95% of them.

Hi Doobsey,

Some further observations:

“We also all need to remember that banks are in the business of lending. Without it as we saw in 2008 the whole shebang stops rather suddenly. Not excusing bad lending, just saying we need them to lend.”

The reason the GFC occurred is directly related to imprudent lending by banks that were not backed up by assets. Certainly, banks need to lend but they are obligated to lend wisely. Their shareholders demand nothing less.

“Now we have an asset base and an income stream. We have the assets and we have income that is either a mix of wages and investment income or maybe just pure investment income. So they approach the margin lenders. As already discussed, nothing illegal on that front as it is a product that just needs to have equity to back it and we have plenty of assets now.”

Again, the issue here is imprudent lending. There are numerous cases within Storm where the banks ignored the borrowings (house loans and income of those concerned -the CBA and the BOQ are guilty of this) and simply went ahead and lent money anyway. Motivation will play a big part in this. Of course, the banks’ thinking has always been that if the borrower defaults, they always have the asset (house) that can sit on their balance sheets as an asset for them. This policy fails when the price of houses falls and they suddenly have depreciated assets on hand. The sub-prime fiasco which started in the USA demonstrates that this is a flawed principle in a deflated market.

“Frank, I was surprised to see you quote that the banks are a law unto themselves and they set the conditions and you follow them or else. Of course they do. And rightly so. They are lending other peoples savings and have a responsibility to those depositors. You should never have expected them to cover anyone else except themselves.”

Any contract has to contain a degree of equity in it. In other words, the conditions cannot be all one-sided. Certainly, one can set conditions, but in any litigation those conditions will be examined to establish whether one party has an unfair advantage over another.

I have already explained that the banks have an obligation to make margin loans on their customers (not Storm financial in this particular case) because the margin loan contracts were between the banks’ customers and the banks. That obligation is not capable of assignment without the authority of the customers concerned. Further, any margin calls must be made in a reasonable time frame. On both counts, the banks have failed to fulfil their obligations.

The practice that has crept into this procedure during the last few years whereby the banks used the financial advisers concerned as a go between rather than contacting the margin loan borrowers directly will, I believe, not be factored into the equation.

A further thing to remember is that the number of margin loan borrowers in Storm were such that it was unreasonable for the bank to expect (using Storm as a go-between) that these margin calls would be made expeditiously.

The May 2007 agreement between Storm and the banks clouded the CBA’s thinking in this regard because they were just as keen as Storm to “wait and see” whilst its customers were teetering on the edge. The CBA is going to find it very hard to justify their position because they failed in their duty of care to their margin loan customers.

You also have banking codes of conduct that these banks have adopted to consider. Imprudent lending will be high on the list. Banks cannot ignore their contractual obligations merely because they are banks and have set the conditions. Conditions, I might add, in the case of the CBA, that were altered by its May 2007 agreement with Storm without the Storm margin loan borrowers authority. They did not notify their margin loan customers that they had done this? They also cannot use the excuse that they relied on Storm to do so because the responsibility was theirs alone. Storm was never a party to any margin loan contracts. Are you when arranging these on behalf of clients? I didn't think so!

“On the margin calls – my latest understanding is that Townsville HQ stopped individual advisers at the local levels from addressing the margin calls directly with clients until after they had tried to renegotiate the terms with CBA. EC must have still been under the assumption the banks were his friend. But yet again a case of Storm HQ needing to have everything centralised so EC could make all the decisions.”

Again, the May 2007 agreement and the presumption by the banks that it was Storm’s duty to make margin calls cannot offset the CBA’s obligations to make margin calls directly on its margin loan customers. I have already outlined the reasons for this in previous postings. It was not Storm’s responsibility to make margin calls. That lay with the CBA alone. The fact that the CBA left it to Storm to do so is a further indictment of their culpability in this regard. See judgements/findings already made in this regard that are mentioned in my previous postings.

“You also mention the promise to monitor things. This is where Storm dropped the ball. They knew what the investments were worth, they knew what the loans were. They could have easily on the bank of an envelope done LVR calcs.”

When the CBA and Storm formulated the May 2007 agreement (which I believe will be considered a breach of contract by the CBA where its margin loan borrowers are concerned) both parties were then duty bound to ensure that they were both working off the same margin loan ratios. This would have been a critical factor in such an agreement. They were not working off the same page which made a nonsense of any systems both parties put in place to deal with margin calls. Again, any such agreement cannot offset the CBA’s obligations to make margin calls directly on its margin loan customers. I think I need to keep repeating this because it will be central to our cases.

You also have “unconscionability” that needs to be introduced into the mix but I won’t go there for the moment.

I reiterate my claim that the Banks have been a law unto themselves because no one has been willing to challenge the way they operate. Because we are part of a class action, we have the necessary numbers to meet the legal costs involved. If we lose, it will ruin us even more but we are prepared to take that chance. The Banks have not acted responsibly and we intend to prove it. We could , of course, fade away without a fuss. Our generation are made of sterner stuff. If it is the end of us, so be it. At least we'll go knowing we gave it everything.

Our biggest gripe is that ASIC are not going after the CBA in this respect. Fortunately, we now have solicitors that are prepared to risk all with us. They too have received criticism from all sides, but they believe in us and in the strength of our cases. In so doing, they have restored some of our faith in human kind.

A win for us will be a win for everyone that deals with banks in the future.

DocK said:

+1

Frank,

I'm sure you have your agenda in mind when you post what you post, but I also resent your presumption to speak for everyone who invested in Storm. Not all of us share all of your views, and have not given you permission to assume we do. Not all of us feel the need to publicly "fight the good fight" and indeed there are many who would tell you that your posts on this particular forum are pointless. I'd be amazed if there were any contributors or readers of this thread who have not already formed a firm view of the "Storm Saga" one way or the other - we all view things and form opinions based on our own experiences, mindsets and personal biases - your tirades are unlikely to alter the opinion of those who are already predisposed to view "the people who invested in Storm" in a negative light, and will probably result in the opposite.

I certainly don't dispute your right to your own opinions, nor your right to post your own personal "truth". I do dispute your right to speak for those you do not know.

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I have though long and hard about your posting since I first received it. It struck me as odd at the time that any former Storm investor would find what I am posting in any way objectionable because I have stated nothing that has not been documented already. Further, I am trying to state our case so the public can better appreciate the facts. I have been doing this for three years now and I’ve received nothing but thanks from many former Storm investors. If you go to Storming on Banks (my website) their gratitude is expressed there. Further, if you read back through my postings, you will see that where possible I have tried to avoid giving a personal opinion, sticking with the documented facts where possible.

As for my taking it on myself to speak for other Storm investors, I am aware that many for one reason or another cannot speak for themselves. I know from speaking with many of them that they therefore appreciate my speaking on their behalf. We have a shared experience because they too have lost their life savings by investing through Storm. If I can be their voice, so be it.

You also need to remember that I run a Group consisting of former Storm investors and have dealt with many of them on a one-to-one basis as well. Without exception, they all share my views so who are you actually speaking for? And why do you want to shut me up?

Maybe your first posting offers a clue! You state in it, “I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?”

No former Storm investors I have encountered to date, and believe me I have met many, would ever dream of making such a statement about the Banks because, like me, they hold the banks accountable for many of their woes. I therefore suspect that you must be referring to people in Storm; namely E and J Cassimatis and some of their cohorts. This makes more sense to me. Quite frankly, I can recognize the tone from my former days posting on SICAG.

I am well aware that Manny still has his devoted followers although for the life of me, I cannot imagine why! I’m pretty certain though that these devotees didn’t lose what we did. In fact, in the end days, Manny was known to have funded some of his favourites. Unfortunately, we were not among them. Maybe you were?

You needn’t worry though! I've done with Storm. The Law can deal with that mob now.

You also state, "...your tirades are unlikely to alter the opinion of those who are already predisposed to view "the people who invested in Storm" in a negative light, and will probably result in the opposite." Why do people always use emotive words like "tirade" when they should use a more appropriate word like "discussion"? If you think my previous postings have been tirades, you have lived a sheltered life.

Aren't you now being presumptuous when you say this? Why are you now speaking for everyone whilst telling me that I can't? What makes you so different in this regard!

This is a public forum where people debate. In a democracy, this is our right. If you don't like what is being said, you have the right to leave. If you have a point to make, then state it. For instance, your statement: I]“I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?”[/I] To whom do you refer? If you believe in something defend it by all means, but first explain what you mean! I hope it's not Storm though because these guys are Storm chasers from way back. You could find yourself in a real blow out!

Julia I really do appreciate the offer of help that you are extending but one I don't trust myself and two I prefer not to trust an internet contact no matter how genuine they appear, probably just me being over cautious, but today we have to be. Thanks for your best wishes though and I certainly hope that all stormies come through this ok.

Others may have observed that this thread is going around in a circular motion, quite frankly I don't care how many circles we make on this thread, I enjoy reading all of your contributions and if these 'circles' are read by potential clients seeking financial advice and they pick up on the pitfalls and the advice given by all and it prevents another tragedy the likes of storm then it's well worth it.

If you go back through this thread Julia you'll see that many of us are repeating ourselves so obviously there must be a good reason for it, whatever that it is, maybe some of it makes me feel better but it's not the only reason I can assure you. Julia I wish you all the best too, continue to educate us in your own way on the other threads, I do read them. I think I can speak for other stormies when I say that we are still on the road back but we can see the end of the road these days even if it's still a way off.

Talking about fees, when we paid I think it was about fifty thousand up front I thought that was ok when you considered that you wouldn't have to pay fees again, so like Frank we thought that we were paying just for financial advice. No carrots. I just thought 'in ten years time this will most certainly pay for itself as everything is getting dearer and by then we'll be retired and maybe can't afford to pay a financial planner.' I wonder how many others thought along similar lines. Quite frankly at the time I thought it was a good idea, thanks in part to our very slick planner!!!

Talking of storm planners I like to see them come on this forum and explain their concepts to those of you who weren't with storm, now wouldn't that set the cat amongst the pigeons. Don't feel shy Mr, Mrs or Ms ex storm financial planner, explain yourself to the forum and give us a break as sometimes we struggle...

I see this thread as very worthwhile to discuss the whys and wherefors and hope that it continues to educate. By now most of us have worked out what the problems were and I enjoy having a public thread/forum to visit which deals specifically with storm financial and the ongoing saga of it all. We, that is us stormies, are all well aware of what this forum has to offer apart from this thread. Perhaps some of you can recommend the threads that we can best visit to move forward. All suggestions welcome from this little black duck

Frank, sorry but I have issues with alot of this.

Firstly the GFC revolved around loans that were not even available in Australia. Tick one for APRA and the Federal Governments at the time for this and not allowing our banks to act or gear in the same way as US banks could. Counter party risk and the unknown of who was holding "old maid" was what stopped the lending between parties.

As a small business owner and a home owner with a mortgage, I need banks to lend to people like me.

In my example I cannot for the life of me see how the margin loan was imprudent lending. Again the margin loan contracts were very specific and very clear. They were loans that required that you put up assets as protection. You had an investment portfolio generating an income. You meet the criteria to lend to!!!!!!!!! Different lending requires different disclosures. Home loans as a rule do not require assets as protection as the home is the asset. In the case of a margin loan the portfolio of investments is the asset. If you choose to put up assets with debt already attached to them then that is your choice and know that the margin loan ranks first. Simple stuff. They have always had the ability to either pay or capitalise interest, investors choice. None of this was anything special that Storm negotiated or that the banks did not offer to EVERYONE. The difference was that not everyone (but plenty non storm people as well) geared to 50% which resulted in margin calls and the sale of assets when markets fell.

For the 99856734th time. The special deal done to allow a borrowing limit of 90% isn't illegal either. It was disclosed on every margin loan statement (at least quarterly) that you recevied. Margin lenders move these lending limits quite regularly and throughout the crisis were making changes on a weekly basis. ABC learning stock was an 80% LVR stock one day, got moved to 50% LVR which meant that clients with that stock needed to find more equity to keep their overall LVR at the same levels and then got removed completely from the margin lending list which meant it could no longer be used as capital. AGAIN, this was all disclosed.

On the margin calls - read my post, I am not saying CBA should not have contacted clients. What I am saying is that the advisers knew of the margin calls and requested the calls to clients were not made. CBA honoured this and it will cost them. I was making a point about the lack of reasonable and decent action by Storm HQ.

My comments on working out LVR is not all that difficult either. LVR = Loan to Value Ratio = Loan balance divided by Lending Value of the underlying assets.

You got a assets of $100 and they will lend to 80% then they are worth $80 for the margin loan purposes. You got a loan worth $60 then your LVR is $60 / $60 = 75%

WHO NEEDS SOFTWARE?????

Nothing Storm did was tricky, it was super aggressive but not complicated or never thought of or something special only their advisers knew how to do. It wasn't that hard to run the strategy and certainly was not hard to monitor. You have one loan that is important and could cause trouble (the margin loan) to monitor and one portfolio of assets held against that loan. The could / should have been actively manouvering to ensure margin calls could not occur. Staged sell downs, whatever. They chose not to and it cost the clients everything.

HQ makes mention of buying low and selling high. What a joke, Storm never sold, NEVER. If markets were rising that meant your LVR was dropping and you were could "Step Up", If markets were falling then you needed to use your cash to buy in to keep the LVR under control and "Step Up" buying more units for the next rally. Does anyone else see the theme? I have never seen an example of Storm saying "Well we have gone on a 150% bull run in the last 7 years, I think we might take some profits".

Good luck with the banks, I just have a feeling that because they will very easily show that it was common knowledge how these products worked but your adviser glossed over them that you are pushing $hit uphill.

Frank Ainslie said:

I have though long and hard about your posting since I first received it. It struck me as odd at the time that any former Storm investor would find what I am posting in any way objectionable because I have stated nothing that has not been documented already. Further, I am trying to state our case so the public can better appreciate the facts. I have been doing this for three years now and I’ve received nothing but thanks from many former Storm investors. If you go to Storming on Banks (my website) their gratitude is expressed there. Further, if you read back through my postings, you will see that where possible I have tried to avoid giving a personal opinion, sticking with the documented facts where possible.

As for my taking it on myself to speak for other Storm investors, I am aware that many for one reason or another cannot speak for themselves. I know from speaking with many of them that they therefore appreciate my speaking on their behalf. We have a shared experience because they too have lost their life savings by investing through Storm. If I can be their voice, so be it.

You also need to remember that I run a Group consisting of former Storm investors and have dealt with many of them on a one-to-one basis as well. Without exception, they all share my views so who are you actually speaking for? And why do you want to shut me up?

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I don't necessarily want you to shut up Frank - just don't presume to speak for me. You may have many followers, and perhaps all those who have joined your group have done so because they share your views? They would hardly have joined if they didn't. I don't doubt that there are some who are happy to have you speak for them - but I'm not. I'll speak for myself.

Maybe your first posting offers a clue! You state in it, “I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?”

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I did not say this - it was in the post before mine.

No former Storm investors I have encountered to date, and believe me I have met many, would ever dream of making such a statement about the Banks because, like me, they hold the banks accountable for many of their woes. I therefore suspect that you must be referring to people in Storm; namely E and J Cassimatis and some of their cohorts. This makes more sense to me. Quite frankly, I can recognize the tone from my former days posting on SICAG.

I am well aware that Manny still has his devoted followers although for the life of me, I cannot imagine why! I’m pretty certain though that these devotees didn’t lose what we did. In fact, in the end days, Manny was known to have funded some of his favourites. Unfortunately, we were not among them. Maybe you were?

You needn’t worry though! I've done with Storm. The Law can deal with that mob now.

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OK, this is what has me really steaming. I am deeply offended by your insinuation that I am a devoted follower of Manny. Nothing could be further from the truth. Perhaps if you had taken just a little time to read some of my posts going back a couple of years, you would have a clearer understanding of my opinion of Manny and his favoured few.

I do indeed think the banks have a case to answer, and look forward to seeing the legal drama unfold. I don't, however, think that all blame lies with the banks involved. I think there is more than enough blame to go around, and am willing to shoulder my share of responsibility for my own situation. I was an ex-storm investor and have also been devastated financially. I have never been a member of SICAG. I am tired of all ex-stormies being regarded as being identical, with identical motives, attitudes, situations and grievances. You are entitled to believe what you want, and blame the banks entirely if that is what gets you through. Just don't presume to speak for me while you do so.

You also state, "...your tirades are unlikely to alter the opinion of those who are already predisposed to view "the people who invested in Storm" in a negative light, and will probably result in the opposite." Why do people always use emotive words like "tirade" when they should use a more appropriate word like "discussion"? If you think my previous postings have been tirades, you have lived a sheltered life.

Aren't you now being presumptuous when you say this? Why are you now speaking for everyone whilst telling me that I can't? What makes you so different in this regard!

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I'd never presume to speak for everyone, merely stating my opinion that your posts are unlikely to alter opinions that are probably firmly fixed by now. Again, if you bother to look you will see that I have been around this thread for some time. I have not said you can't speak - just pointed out that you do not speak for all. You don't speak for me.

This is a public forum where people debate. In a democracy, this is our right. If you don't like what is being said, you have the right to leave. If you have a point to make, then state it. For instance, your statement: I]“I'd also say to you that not every person or entity that finds themselves in the 'dock' could or should be automatically presumed guilty. Do we not practice "innocence until proven guilty" here in Australia?”[/I] To whom do you refer? If you believe in something defend it by all means, but first explain what you mean! I hope it's not Storm though because these guys are Storm chasers from way back. You could find yourself in a real blow out!

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My point is that If I have something to say, I'll damn well say it for myself. You may speak for some, you may speak for many, but you do not speak for all ex-storm clients. Just as our situations are not the same, neither are our opinions.

I wish you well with your quest. I will follow with interest the eventual court case. Nothing would please me more than to see Manny & Julie answer for their actions in court also.

DocK said:

I don't necessarily want you to shut up Frank - just don't presume to speak for me. You may have many followers, and perhaps all those who have joined your group have done so because they share your views? They would hardly have joined if they didn't. I don't doubt that there are some who are happy to have you speak for them - but I'm not. I'll speak for myself.




I did not say this - it was in the post before mine.



OK, this is what has me really steaming. I am deeply offended by your insinuation that I am a devoted follower of Manny. Nothing could be further from the truth. Perhaps if you had taken just a little time to read some of my posts going back a couple of years, you would have a clearer understanding of my opinion of Manny and his favoured few.

I do indeed think the banks have a case to answer, and look forward to seeing the legal drama unfold. I don't, however, think that all blame lies with the banks involved. I think there is more than enough blame to go around, and am willing to shoulder my share of responsibility for my own situation. I was an ex-storm investor and have also been devastated financially. I have never been a member of SICAG. I am tired of all ex-stormies being regarded as being identical, with identical motives, attitudes, situations and grievances. You are entitled to believe what you want, and blame the banks entirely if that is what gets you through. Just don't presume to speak for me while you do so.



I'd never presume to speak for everyone, merely stating my opinion that your posts are unlikely to alter opinions that are probably firmly fixed by now. Again, if you bother to look you will see that I have been around this thread for some time. I have not said you can't speak - just pointed out that you do not speak for all. You don't speak for me.



My point is that If I have something to say, I'll damn well say it for myself. You may speak for some, you may speak for many, but you do not speak for all ex-storm clients. Just as our situations are not the same, neither are our opinions.

I wish you well with your quest. I will follow with interest the eventual court case. Nothing would please me more than to see Manny & Julie answer for their actions in court also.

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Okay DocK! Point taken.

Listen everyone! I am not speaking for DocK! If anyone else needs to be excluded let me know!

Seriously though, I too believe that Storm must share a large part of the blame. I wouldn't have posted Walker's comments on the Storm Financial model if I was trying to deflect the blame. I apologize for getting it wrong where you are concerned!

The truth of the matter is that I am a little suspicious of anyone that springs to the defence of Storm which I thought you were trying to do. I've had too many run-ins with this type in the past in places you wouldn't believe.

Having said that about Storm, I must add that the banks are deeply involved in all this. This is not a normal case of banks lending money prudently, far from it. In certain cases criminality has taken place.

You are right about certain people on this forum - they will never change but no matter! I will present what I have found over the last three years and leave it for them to decide. I am constructing a CBA website for those Storm clients that borrowed through that bank anyway, so much of what I write here will not be wasted, merely transferred.

I will also opt out when I have posted the relevant information. To linger too long would be to invite meaningless debate.

I enjoy writing! It takes my mind off things! Whether anyone gleams anything from what I write here or has a change of heart is irrelevant in the end. The Courts will decide our fate!

As Doobsy said, this should be an education process. If the pupils don't want to learn, because they believe they have the answers already, that's their prerogative.

Have a good day!