Commonwealth Bank

CHARGE SHEET 

1. The CBA (CGI)  failed to make margin loan calls expressed in writing directly to its Storm customers.

2. The CBA (CGI) entered into covert agreements with Storm Financial that breached its contractual obligations to such customers under the margin loan contracts it entered into with these customers.

3. The CBA (CGI) entered into covert agreements with Storm Financial that resulted in ill-advised financial advice and over-leveraging of customers assets.

4.  The CBA (CGI) failed in its responsibility to apply prudent banking principles when authorising margin loans to such customers.

5.  The CBA (CGI) Bank did not consider the liabilities of their margin loan Storm customers when extending margin loans and therefore did not ascertain their true capacity to repay these loans.

6.  The CBA (CGI) assigned its obligations to Storm when arranging these margin loans which breached its margin loan customers’ rights.

7.  The CBA (CGI) allowed Storm to provide unverified information relating to margin loans  (Income, liabilities etc.)

8.  The CBA (CGI) failed to act expediously when its Storm customers’ investments portfolios were at risk, because it waited for advice from Storm instead of contacting its customers.

9.  The CBA (Colonial) did not apply prudent banking principles when extending housing loans for investment purposes. 

10. Business funnelled by CGI/Colonial Home and Storm constituting an unregistered managed investment scheme.

By acting in this way, the Commonwealth Bank of Australia ignored its duty of care, was imprudent when authorising house and margin loans, breached its customers’ contractual rights, failed in its contractual obligations, and violated its own banking code of conduct.

In so doing, it operated contrary to the statutory Acts that are binding on institutions that offer financial services. These Acts include: The ASIC Act, the Trade Practices Act, and the Fair Trading Act. Whether they have breached the Corporations Act and other Acts will be for ASIC to ascertain.

In summary, the CBA along with the Macquarie Bank and the Bank of Queensland formed an unholy alliance with Storm Financial for monetary gain. By so doing, these banks ignored their Storm customers' interests and rights. They recklessly proceeded without their customers' authority to implement schemes that placed their customers' assets at 'high risk'.  This risk was further compounded by; the loose control systems that were put in place, a lack of document verification, and the assignment of tasks and responsibilities that were not clearly defined. This led to a process that was cumbersome, slow, and open to abuse by all concerned. In adverse times, such as occurred in late 2008, this was a recipe for disaster.