Banks defend Storm relationship

TWO banks have defended their relationship with Storm Financial and argued a case against them is weak and inaccurate.

The Bank of Queensland and Macquarie Bank have been accused of acting unconscionably and being "knowingly concerned" in an unregistered managed investment scheme.

The Australian Securities and Investments Commission is pursuing the banks, and Storm, in a trial in the Federal Court in Brisbane.

A class action against the banks, involving some of the hundreds of investors who lost millions when Storm collapsed in 2008, is running on the coat tails of this ASIC action.

Victims are arguing the banks acted unconscionably when they lent millions of dollars to people without considering whether they had the capacity to pay the money back if the stock market crashed.

The banks have argued Storm was not running a managed investment scheme and, therefore, they could not have been knowingly involved.

Macquarie barrister John Sheahan said on Thursday the Storm failure was well known but the company did not collect money and did not manage people properly.

He said Storm's model was "confined to advice, monitoring and ministerial assistance".

"Storm was in business, went into liquidation, many clients lost money but there is no connection between items two and three," he said.

"Storm clients did not lose money because of liquidation.

"Storm went into liquidation by its bankers, which all wanted money back from it."

Barrister Andrew Crowe also told the court the Bank of Queensland was not aware if Storm was running an unregistered scheme, pointing to other cases where pooled funds did not amount to a scheme.

Evidence is expected to begin on Friday.

The trial continues.



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