The Bank of Queensland has reached an agreement to pay $17 million to settle proceedings brought against it by ASIC and a class action on behalf of borrowers advised by Storm Financial.
In a statement released via the ASX website yesterday, BOQ said its settlement – which is subject to Federal Court approval – will conclude both of the outstanding Storm Financial proceedings.
“The gross payment by BOQ to settle ASIC’s proceedings and the class action is $19.7 million, with $17 million of this to be paid to BOQ customers,” a statement from BOQ said.
“The net impact after tax to BOQ will be $22.1 million, which includes all legal costs and an additional provision for remediation costs. This will be normalised in the determination of cash earnings for BOQ’s result for the year ended 31 August 2014,” it said.
“The settlement agreement includes acknowledgement by all parties that BOQ denies any wrongdoing in relation to both proceedings,” the statement said.
BOQ acting chief executive Jon Sutton said it will now work towards providing certainty to the customers who were involved.
“We have worked closely with Storm customers over the last five years and will continue to consider their individual circumstances,” Mr Sutton said.
“Eligible customers will be contacted by the class action lawyers in the coming months and will have the option of accepting a settlement payment or staying on their existing repayment arrangements,” he said.
In December 2010, ASIC commenced civil proceedings in the Federal Court of Australia against CBA, Macquarie Bank and BOQ with the aim of obtaining compensation for Storm investors who suffered losses.
The proceedings alleged that Storm operated an unlawful managed investment scheme and that the banks were involved in the operation of the scheme.
Following compensation payments made by CBA of up to $136 million and Macquarie Bank of approximately $75 million, the settlement with BOQ will bring to an end the existing litigation brought by ASIC to obtain compensation for Storm investors.
The payment settles ASIC's unregistered managed investment scheme proceedings against BOQ commenced in 2010, and the class action commenced against BOQ in 2012.
The settlement with ASIC is conditional upon court approval of the class action settlement, according to an ASIC statement.
Steps will soon be taken to initiate the settlement approval process with the court, ASIC said.