Shareholders of direct insurer Freedom Insurance Group Ltd have been asked to approve $220,000 in remuneration to liquidators Joseph Hayes and Andrew McCabe of Wexted Advisors at an extraordinary general meeting on February 21 to wind up the company.
Freedom said in an addendum to its ASX notice of the EGM, its subsidiaries had each held extraordinary general meetings where respective shareholders of each had resolved to enter members voluntary solvent liquidation and appoint Hayes and McCabe as liquidators.
Freedom is the only entity left that is not yet in liquidation after Freedom Insurance Pty Ltd; Customer Contact Pty Ltd, Freedom Insurance Administration Pty Ltd, Sprectrum Wealth Advisers Pty Ltd; Insurer Network Services Australia Pty Ltd; and Finwealth Holdings Pty Ltd had entered voluntary liquidation.
Freedom group’s wind-up follows ASIC’s scathing review of direct life insurance sales, in the lead-up to the financial services royal commission (FSRC) in 2018.
Freedom felt the full force of the commission when it admitted to nine incidents of misconduct related to its marketing and distribution of life products and selling insurance to vulnerable consumers, including one young man with Down syndrome, plus 76 incidents of conduct that fell below community standards and expectations.
Freedom also admitted it might have breached anti-hawking laws related to telephone sales, processes and unsolicited call procedures.
In his address to shareholders at the company’s AGM in November, departing chair David Hancock said FY19 had been “extremely challenging”, having to deal with the implications arising from the FSRC.
Moreover, ASIC’s review had included several recommendations that had “significantly affected” Freedom’s operations.
“Specifically, it appeared that Freedom’s sales model would not meet the requirements of ASIC’s proposed new regime,” he said. After a strategic review, the company concluded there were no commercially viable options to recommence sales.
Because of a liquidity shortfall in early 2019, arising from payments on commission clawbacks, the company was forced to enter into an arrangement to transfer its policy administration services for Swiss Re and NobleOak to Noble Oak subsidiary Genus Life Insurance and suspend trading. The policy administration services for AIA were also transferred to another entity.