Commonwealth admits fault in Storm sinking

Wednesday 17 June 2009

Article by Mozo

Commonwealth Bank has conceded that its lax oversight of Storm Financial’s lending was a contributor to the company’s downfall.

Storm Financial was placed into voluntary administration on January 15th after its customers lost billions of dollars on their investments. On Wednesday (June 17th), Commonwealth chief executive Ralph Norris said that the bank had identified shortcomings in its lending to Storm customers.

"We are not proud of our involvement in some of these issues and we are working toward a fair and equitable outcome for our affected customers," he added.

The financial planning network was forced into voluntary administration after Commonwealth gave the company one day to pay back millions of dollars in defaulted loan payments.

A parliamentary inquiry is now being carried out to establish whether Commonwealth acted irresponsibly by issuing loans to Storm customers through the company without any direct contact with them.

Commonwealth has also this week been in the firing line for hiking its home loan interest rates by 0.1 per cent, despite government advice to keep rates pegged back.

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