ASIC has commenced civil penalty proceedings in the Federal Court against the former Managing Director of Freedom Insurance and one other person in relation to sales incentive programs offered by Freedom Insurance Pty Ltd.
The proceedings allege former Freedom MD, Keith Cohen, and Robert Oayda, a former Quality Control manager, were involved in breaches of conflicted remuneration and other laws.
ASIC notes the alleged conduct relates to the marketing and selling by Freedom Insurance, which is now in liquidation, 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.
…these incentives influenced the sales agents’ conduct and made driving the sale their focus, rather than customer needs
The regulator alleges that both Cohen and Oayda “…were involved in decisions that saw sales agents qualify for overseas holidays if they reached certain sales targets and a Vespa scooter if they made the most sales.” It notes its concern that these incentives influenced the sales agents’ conduct and made driving the sale their focus, rather than customer needs.
ASIC alleges that between November 2017 and October 2018:
- Cohen was knowingly concerned in, or party to, breaches of the conflicted remuneration provisions by both Freedom Insurance and Insurance Network Services Australia Pty Ltd (in liquidation) (INSA) involving two separate trips to Bali and a Vespa scooter, and Oayda was also knowingly concerned in, or party to, Freedom Insurance’s breaches
- Cohen and Oayda were knowingly concerned in, or party to, breaches by Freedom Insurance of its licensee obligations arising from its breaches of the conflicted remuneration provisions
- Cohen breached his director’s duties by exposing Freedom Insurance and INSA to a foreseeable risk of harm in relation to such conflicted remuneration
Noting that Freedom Insurance was a case study in the Financial Services Royal Commission, ASIC reports the Freedom Group of companies was placed into liquidation in February 2020.
The regulator is seeking declarations, civil penalties, injunctions and disqualification orders against Cohen, and declarations and injunctions against Oayda.
