The Financial Ombudsman Service (FOS) is likely to become involved in the collapse last month of north Queensland advisory firm Storm Financial.

The Financial Planning Association (FPA) is also feeling the heat following the Townsville-based company’s collapse.

Investments, Life Insurance and Superannuation Ombudsman Alison Maynard told insuranceNEWS.com.au FOS has already received a number of enquiries and complaints about Storm.

She says the issue FOS is most likely to face in dealing with these disputes relates to monetary limits – a maximum of $100,000 per claim if the complainant was aware of the dispute before July 1 last year, or $150,000 if it was not known until after then.

“The impression I get from media reports is that many of the disputes or complaints would be outside the monetary limits,” she said.

The FPA has borne the brunt of the criticism from lawyers over the contents of a survey it sent to its members on Storm last month shortly before its journey into receivership. The association has had to defend itself against criticism that it is failing to protect the reputation of the industry by not disassociating itself from Storm.

The FPA responded to the criticism last week by terminating Storm’s principal membership.

CEO Jo-Anne Bloch announced the termination in a meeting on Friday, saying the FPA takes complaints against members very seriously and that any unethical behaviour in relation to the collapse of Storm will be severely dealt with.

“Investors need to know that they can trust advice they receive from financial planners who are members of the FPA,” Ms Bloch said.

The FPA is now conducting a thorough investigation into Storm and will assist investors damaged by the collapse.

Investors whose disputes involve sums above the limits will most likely have to pursue legal action if they can’t resolve their issue with Storm. With the large number of possible claims, that may take some time.

The last such crisis facing the financial services sector was the $300 million collapse of Western Australian property group Westpoint in 2006. “We’ve got a handful of Westpoint complaints left after having received hundreds,” Ms Maynard said. “I don’t think legal action has really resolved it all. So I think we’re still faster than a court action.”

Storm’s administrator Worrells Solvency and Forensic Accountants has advised that as a result of the company ceasing operations it is not in a position to transact further business for clients but hopes to be able to introduce alternative financial advisors to clients in the near future.

It has not yet advised whether the company will continue to operate or whether it will be placed into liquidation.