No one likes having to litigate to get redress. It's expensive and time-consuming. Mediation is usually preferable, or so I used to think. But with billions of retiree dollars lost in the past few years after exposure to poor practices or worse, the emergence of class-action lawyers in Australia has been a positive development.

Court actions facilitated by such lawyers would open up to public scrutiny the practices of negligent financial advisers, property-scheme spruikers and impudent margin lenders. The spotlight would be shone upon the miscreants for the illumination of the investing public. It would put pressure on the regulator to lift its game, point to deficiencies in the law that could be corrected and hasten the departure of undesirable operators from the financial services industry.

But rarely do these actions make it to court. At least when it comes to the financial services sector, they are almost always settled through mediation. No liability is admitted and the details are subject to confidentiality agreements that leave the defendant's reputation mostly intact.

These issues have been brought to a head by the resolution scheme that has been brokered between class-action lawyers Slater & Gordon and the Commonwealth Bank. It follows losses by thousands of clients of financial planning firm Storm Financial, which went under at the end of 2008 after the sharemarket collapsed.

Storm gave the same advice to its mostly retiree clients; to gear into the sharemarket, often with their homes as security. The biggest margin lender to Storm clients was the Commonwealth Bank, which has been accused of imprudent lending practices.

Under the terms of the resolution scheme negotiated by Slater & Gordon with the bank and reviewed by an independent panel of senior lawyers, most of the 2000 former Storm clients who are registered for the resolution scheme will share a compensation package offered by the bank.

Each individual's compensation will vary depending on their circumstances but the total value of the compensation is confidential.

There's speculation that the amount of compensation paid by the bank may not be much more than $200 million - a fraction of what was lost.

Storm clients were not given margin calls when the sharemarket was falling in 2008. They say that had they received a call from the bank's margin-lending arm, they would have tipped some money into the margin loan or sold some shares to restore the minimum loan-to-valuation ratio that was required by the lender.

The market continued to fall throughout 2008. Investors heard nothing from CBA or Storm. Towards the end of 2008 the bank finally sold many investors out of their shares, realising losses.

Estimates of the total losses vary. But even at the very lower estimate of $1 billion, the bank's restitution to former Storm clients, on average, may not be much more than 20 cents in the dollar.

Former Storm clients who reject the offer do, however, retain the right to pursue legal redress.

But the resolution scheme has been criticised as inadequate by Stewart Levitt, the principal director of Levitt Robinson Solicitors, which is representing about 70 former Storm Financial clients.

Levitt wants to present his case for a class action directly to the independent panel of senior lawyers and for their deliberations to be made publicly rather than behind closed doors.

Levitt says he has a strong case that would be likely to influence the bank to "improve its offer substantially".

A Slater & Gordon lawyer, Damian Scattini, refused to comment on the likely value of the compensation package. However, he says the compensation resolution scheme reflects "pretty closely what they [former Storm clients] would have received on a good day in court".

Scattini disputes Levitt's claim that the case could be run as a class action, saying each individual case would instead have to be run in court and that would take years.