John Williams (NSW, National Party) Share this | Hansard source

I congratulate the committee on the report that they have put together on this issue. I moved a notice of motion to have an inquiry into Storm financial activities around banks et cetera just prior to the Joint Parliamentary Committee on Corporations and Financial Services establishing this inquiry. The committee learnt a lot about the tragic events around the stock market and Storm Financial. It was a harrowing, terrible time for many people—people who are not 30 or 40 years of age but 60, 65, 70 years of age and older—who, because of the Storm model and their investments with Storm, lost virtually everything. The committee heard clear evidence that many of these people were lent money that they should never have been lent. The products were geared too high. It was basically a lending spree for some of the banks.

Of course, when the market crashed the inevitable happened. The product was simply geared too high, and it was sad to see that when the margin calls were triggered many were not notified. The Commonwealth Bank claimed that they notified Storm and said that it was Storm’s obligation to notify the clients that they were in margin call. Storm said that it was not their duty to do so and that in 2002-03, when margin calls were being acted on, it was the bank’s duty. This was the buck passing that carried on during the whole inquiry. In my opinion, there were ridiculous, risky lendings carried out by the banks. Unfortunately for many investors, they simply trusted their advisers, hence the committee has recommended that a fiduciary duty of care be instigated so that the client’s interest must be put first and foremost and the adviser is not to seek a product that gives trailing commissions and the most money to the adviser. That is a very good recommendation by the committee. The committee also saw that the fact that people could obtain an Australian financial services licence by doing a few weeks work on the internet was simply not good enough. Hopefully the bar will be raised for those who seek to achieve financial licences in the future.

As I said, it was a very stressful time for many of those involved. I must make note of SICAG, the Storm Investors Consumer Action Group, who in January this year met at Redcliffe, just out of Brisbane. I attended the meeting. They formed that group because there were hundreds and hundreds of people who did not know where to turn. Thanks go to those who formed that group and to John McLennan for going up there and instigating it so that they had someone to fight for them. Thanks also go to Noel O’Brien, Mark Weir, Graham Anderson and others who have given so much. They are under so much financial stress and are in such a financial mess themselves, but they have committed so much of their time to help others. That was a noble act, and let us hope that the settlements come forward. I do acknowledge that the Commonwealth Bank have said that they will right the wrongs and have admitted to those. That is a step in the right direction. I myself know what it is like to fight in the courts against a bank for some 10 years. It is not a lot of fun, I can assure you. It is costly and it is stressful, and hopefully these people can rebuild their lives, get back on track and retain their houses. Hopefully many of them who are in the twilight of their lives can enjoy the rest of their lives and be able to sleep at night.

I commend the committee. It worked well together. As always, the staff were terrific. Shona, Andrew and the others worked so hard. We travelled to many areas to hear the stories and the evidence. Let us sincerely hope that, because of this inquiry, people do not find themselves in this situation again at some time in the future. I again commend those in SICAG who worked so hard at giving moral support, at listening to people who were in a state of anger and frustration and who did not know where to turn. There was someone there for those people to call. There was someone to talk to them. Many simply did not know where to go in life. Let us hope that their futures are a little bit rosier. The committee had some 400 submissions, and we brought that to the public’s attention. I think that the media were very fair all the way through the inquiry. Let us hope that no-one has to stand up in this place in years to come and discuss the same issues again.