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Bank of Queensland stands its ground -

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Bank of Queensland stands its ground

Annie Guest reported this story on Friday, June 26, 2009 12:42:00

Critics have called on the Bank of Queensland to clarify its position amid reports it's being
officially investigated over its involvement in the $3-billion collapse of the Storm Financial
advisory firm. The Bank insists there's no evidence of improper or dishonest practices.

PETER CAVE: The Bank of Queensland is facing criticism that it has misled the market after it
strongly defended its involvement in the collapse of the Storm Financial advisory firm.

The Bank said in a statement yesterday that it wasn't being formally investigated over the
$3-billion collapse and that there's no evidence of improper or dishonest practices.

"The World Today" understands however that the Australian Securities and Investments Commission has
since told the bank that it is under investigation.

Critics say that the Bank of Queensland should release a clarifying statement today. The company
says its statement was correcting the record and there's nothing more to add.

Annie Guest reports from Brisbane.

ANNIE GUEST: Keith and Dianne Ensor had a home loan through the Bank of Queensland. Storm Financial
arranged the loan and the retirees used the money to invest in the share market through Storm.

The pair in their 60s and 70s then had to sell their home to repay a margin loan after the share
market dived.

And now they're surprised by the Bank of Queensland's statement that it wasn't being formally
investigated as Keith and Dianne Ensor are among those who found anomalies in their home loan

It said the retirees had an income when Keith Ensor says they had next to none.

KEITH ENSOR: I was supposedly tied up with a transport company, money-wise or work-wise, while we
really weren't earning anything.

ANNIE GUEST: The share market collapse meant that you had to find money to repay margin loans and
therefore sold your house. What effect has this whole saga had on you and your wife?

KEITH ENSOR: We do have a caravan and a car. We do have a few dollars in the bank. We are actually
doing house sitting. My wife goes back to work three days a week. She is now on anti-depressants.

ANNIE GUEST: The Bank of Queensland said it was taking the opportunity to clarify key facts after
significant media misinformation when it released its statement yesterday.

It said there was no evidence of improper conduct by the Bank and that its involvement was to
provide 320 customers associated with Storm home equity loans, not margin loans.

The loans total about $105-million. Of 15 customers who have lodged hardship applications, the bank
says all but one were approved.

But since that statement "The World Today" understands the Australian Securities and Investments
Commission has told the Bank of Queensland it is under investigation.

Storm was headquartered in Townsville where economist Carey Ramm has since advised its former

CAREY RAMM: Unfortunately it looks like the Bank of Queensland are going to have to make a
humiliating retraction of their strongly worded denial about their involvement with Storm Financial
today because it's quite clear that they are under investigation by ASIC.

ANNIE GUEST: The Bank of Queensland took a very different approach to the Commonwealth Bank. It had
2,500 customers involved in the Storm collapse, many of whom borrowed money to take out margin

The CBA has accepted some responsibility and agreed to a former High Court judge independently
arbitrating between the bank and the clients' lawyers.

Carey Ramm says the Bank of Queensland needs to also accept blame.

CAREY RAMM: With the Bank of Queensland it's actually been some of the worst documentation that I
have seen out of all the Storm clients.

I mean I have seen one old-age pensioner who had an income put on her loan application form where
supposedly she earned $104,000 per month net of tax. I've seen Bank of Queensland approving loans
the day before they are actually applied for.

ANNIE GUEST: What do you say to the Bank of Queensland's comments in its statement that it had been
portrayed unfairly and negatively in the media when it's the Bank of Queensland provided the Storm
clients with equity loans, not margin loans?

CAREY RAMM: Well look unfortunately all the problems associated with the Storm victims stem from
the home equity loans and then the subsequent margin loans on top of that. Really in Australia it
comes down to loan affordability and what we have seen here from the Bank of Queensland is a number
of loans where home affordability wasn't assessed adequately by the bank.

ANNIE GUEST: "The World Today" sought an interview with the Bank of Queensland to respond to the
criticism but a spokeswoman referred us to the statement yesterday, saying it had placed the facts
on the record.

PETER CAVE: Annie Guest reporting.