ASIC has announced that it has secured $102 million for around 83,600 customers who were, or may have been, mis-sold insurance policies over the phone by Freedom Insurance between 2010 and 2018.
The corporate regulator confirmed the news on Wednesday (17 August) and said more is expected to come.
The “harmful sales and retention practices” of Freedom Insurance were revealed in ASIC’s 2018 review of the sale of direct life insurance. In response, ASIC banned unsolicited cold call telephone sales of direct life insurance and consumer credit insurance the following year.
In October last year, ASIC also commenced civil proceedings in Federal Court against former managing director and former quality assurance manager of Freedom Insurance – Keith Cohen and Robert Oayda – where it was 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.
At the time, ASIC 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.
In a statement released this week, ASIC deputy chair Karen Chester said Freedom Insurance used harmful practices to sell funeral, accidental death and life insurance policies to “vulnerable” customers and used unfair retention practices to keep customers in those policies.
“We believe there are thousands of customers that likely remain entitled to a refund but they haven’t come forward to claim it,” Ms Chester said.
“We encourage Freedom Insurance customers from between 2010 to 2018 who believe they were mis-sold a policy, or who tried to cancel their policy without success, to contact their insurers and be assessed for remediation. We have published information on ASIC’s website about the steps customers can take to seek a refund, including the contact details for each insurer.”
AIA Australia, NobleOak Life, Swiss Re Life and Health Australia and ClearView Life Assurance issued the policies distributed by Freedom Insurance.
AIA Australia, NobleOak Life, Swiss Re Life and Health Australia commenced the Freedom Insurance Remediation Program in February 2020 for customers sold policies between October 2010 and October 2018.
ClearView commenced a separate program in June of this year.
Freedom Insurance no longer sells or administers insurance products, with the Freedom Group companies placed into external administration in February 2020 and deregistered.
ASIC asleep at the wheel yet again.
ASIC let this behavior go on for at least 8 years and DID NOTHING.
ASIC were forced to do something only due to the RC. Without the RC no doubt ASIC would have done what they usually do = NOTHING useful.
ASIC spend all their time chasing small Advisers for minor indiscretions and spend zero time chasing bigger crooks and ingrained old Insto terrible management / big wig behavior.
ASIC = Australia’s Stupid Incompetent Cop : – /
Reality is ALL direct insurance should be outlawed. Insurance needs to be purchased from an Authorised Representative.
So none of the insurers knew or had any idea about how the policies were being generated by Freedom Insurance??
NobleOak repetitively criticised Financial Advisers throughout the LIF negotiations and openly talked down the remuneration model of commission versus going direct to the consumer and here we are with Freedom Insurance flogging NobleOak product over the phone, cold calling, unsolicited, incentive driven direct selling.
….and NobleOak or any of the other insurers knew nothing about their practices or if they did, did nothing to stop it or refuse to accept business from Freedom Insurance.
I have been around a long time and I know very well that people talk and people know, so how is it that these insurers continued to accept business?
Because of greed..that’s why.
Irrespective of the method by which the business was being generated, these insurers chose to accept it.
And who pays the price?
The consumer and the Financial Adviser….
with the ethical advisers suffering reputational damage because of the practices of Freedom
Insurance and the greed and push for market share by the associated insurers.
Disgraceful.
didn’t freedom also own a dealer group of advisers that asic closed down?
And who pays for ASIC’s costs in this case?? Advisers who have yet again done no wrong??
So Freedom did the wrong, yet the underlying insurer has to pay for their indiscretions? Is that right? I wonder if ASIC thought about the repercussions of this. I would have thought these insurers will further increase premiums for policy holders, which is exactly what consumers don’t want.
Sounds like what the industry funds have been doing keeping clients locked in default super funds because the SG has to go into the Super fund their union told them they have to stay in