THE Commonwealth Bank may yet face a costly class action in the Federal Court by disgruntled Storm investors, despite a resolution scheme tipped to cost up to $300 million.
In a landmark deal, the CBA this week revealed it would offer cash refunds and home loan cuts to up to 2000 former investors in Storm Financial who lost homes and life savings in the corporate collapse just over a year ago.
Slater & Gordon lawyer Damien Scattini, who brokered the settlement on behalf of 1250 clients, said it was a fair outcome and avoided "litigation Armageddon".
But hundreds of unhappy Storm victims are holding out for a bigger compensation payout ahead of an Australian Securities and Investment Commission investigation due to be released next month.
Lawyer Stewart Levitt, who represents 70 Storm victims, said his firm was likely to file a class action in the Federal Court by Easter.
He cited a legal precedent in the Goodridge vs Macquarie Bank case in the Federal Court two weeks ago to have a client's entire portfolio reinstated in full.
Any court damages payout from a class action could be much higher.
"It is unclear how the (CBA) system will work for people whose homes were over-valued," Mr Levitt said. "It is also unclear when hardship provisions will cut in.
"The destitution of the elderly superannuees through the operation of the CBA/Storm scheme has not been fairly or adequately addressed."
Storm was Queensland's biggest corporate collapse and had about 14,000 clients – with about 3000 retirees who invested their life savings and re-mortgaged their homes. Investors lost about $3 billion.
Storm Investors Consumer Action Group yesterday said it would now "redouble" efforts to go after the other banks, including Macquarie Bank, Westpac, ANZ and Bank of Queensland.
"Some banks have been recalcitrant and are trying to buy time to see the outcome by ASIC," said SICAG co-chairman Noel O'Brien.
"If ASIC comes in with a better offer, it trumps what is on the table."
MP Bernie Ripoll, who headed an inquiry into financial services in the aftermath of the Storm fiasco, urged other banks to follow the CBA.
An ANZ spokesman said the bank would have a customer resolution scheme for 200 to 300 clients in a few weeks.
Macquarie Bank refused to comment on the matter.
