In a statement to the ASX, Freedom said it would implement a number of initiatives as part of a strategic review undertaken with the assistance of Deloitte.
Initiatives include a “cessation of new sales, changes to senior management, reduction in staff and operating costs, and modification to internal processes and remuneration of employees”.
“The board has determined there is no immediate commercially viable option to recommence sales of its life products,” Freedom said.
“However, Freedom will continue to assess alternative business models that may arise which would enhance shareholder value and deliver enhanced customer outcomes.”
The Freedom board also took the view that it’s required to make remediation payments in relation to affected customers.
It expects to make a provision for net remediation costs in its financial accounts for the period ending 31 December 2018 of between $3 million and $4 million.
“Freedom is currently undertaking a detailed review to determine the size and scope of such remediation, which will be reviewed and approved by an independent expert,” Freedom said.
In September, the Hayne royal commission heard from Grant Stewart, a Baptist minister and the father of an adult son with Down syndrome on a disability support pension.
Mr Stewart told the inquiry that in June 2016 his son was sold insurance by Freedom Insurance.
“We became aware when a letter was sent to him,” Mr Stewart said.
“I was flummoxed, really. I questioned our son about how this could have taken place. That was when he remembered talking to someone on the phone. He was quite distressed about it and thought he had done something wrong.”
If the Best Interests Duty had been extended to Freedom Insurance and the scammers at other evil companies such as Real Insurance or Insurance Line then 100% of their insurance sales would fail. I am amazed that ASIC even allowed these companies to exist in the first place.
Clients would be better served getting the money paid to these “insurers” and burning it than paying their premiums. At least that way they might save some money instead of relying on an insurance policy which was never designed to pay out.
General advice in person, or over the phone must be banned for all financial products otherwise these companies will continue to steal money from the aussie battlers who can least afford it.
One set of rules and one set of educational standards for all people in the financial services industry.
Please explain why ASIC and the Government see it as ok for a backpacker from the UK with 2 hours training can sell a Life Insurance policy to a person over the phone, or in person, without the need to Know Your Client, without the need for a Statement of Advice, without the need to adhere to the Best Interests Duty, without the need to keep up on CPD points, without the need to have a degree as well as a Diploma and the INTERNATIONALLY RECOGNISED CFP. All whilst getting paid the same commission as an adviser who has to waste at least a day to get to the same result as the backpacker.
I am thinking its better being less educated and poorly trained if you want to actually help clients instead of spending your life doing paperwork which is never read by anyone other than compliance managers