A former managing director of Freedom Insurance and former quality control manager are being sued by ASIC following “breaches of conflicted remuneration”.
On Monday, the corporate regulator confirmed that it has commenced civil proceedings in Federal Court against Keith Cohen and Robert Oayda. It’s alleged Mr Cohen and Mr Oayda were involved in decisions that saw sales agents qualify for overseas holidays if they reached certain targets and a Vespa scooter for the agent who made the most sales.
ASIC has raised concerns that the incentives influenced the sales agents’ conduct and led to a lack of focus on customer needs.
It’s alleged that between November 2017 and October 2018 Mr Cohen was knowingly concerned in or a party to breaches of the conflicted remuneration provisions by Freedom Insurance and the now-liquidated Insurance Network Services Australia involving two separate trips to Bali and a Vespa scooter, and that Mr Oayda was also involved or a party to the Freedom Insurance breaches.
“The impact of incentives when selling financial products has been a longstanding issue for ASIC. We are concerned that incentives may cause sales agents [to] put their own need for sales and reward above the needs of their customers,” ASIC deputy chair Sarah Court said.
“The alleged conduct relates to the marketing and selling by Freedom Insurance of insurance products issued by Swiss Re Life and Health Australia Limited, including final expenses cover (a type of life cover), accidental death cover and accidental injury cover.”
ASIC is seeking declarations, civil penalties, injunctions and disqualification orders against Mr Cohen, and declarations and injunctions against Mr Oayda.
A date for the proceedings is yet to be confirmed.
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