Freedom remains in ‘holding pattern’

Freedom Insurance Group Ltd is in a “holding pattern” Freedom Insurance Group Ltd chair Pauline Vamos told shareholders today at an extraordinary general meeting (Insurance News, February 18).

ASIC had advised Freedom its final deregistration from the ASX would not go ahead until it had concluded its investigation into the company’s conduct, “the timing of which we are not privy to”.

“However, we have taken all steps reasonably possible to finalise the remaining outstanding issues so that an orderly liquidation can occur with minimal depletion of capital,” Vamos said.

Vamos said subsidiary Spectrum Wealth Advisers Pty Ltd’s business had been “a particular challenge” but she was pleased ASIC had now cancelled Spectrum’s Australian Financial Services (AFS) licence.

Earlier this month, ASIC banned Mark Schroeder, former Spectrum CEO, director, responsible manager and a key person, from providing financial services for six years for his role in several of Spectrum’s compliance failures.

ASIC found Spectrum had not taken reasonable steps to ensure its representatives complied with the law. The licensee had failed to audit its representatives regularly and ensure its representatives were adequately trained and competent.

It also found Spectrum did not have enough human and technological resources to meet its licence obligations.

ASIC cancelled Spectrum’s AFS licence soon after it stopped trading and Freedom applied to ASIC for the cancellation.

Schroeder’s ban came after he on Feb 4 withdrew a request of October 21, 2019, to the Administrative Appeals Tribunal for a stay of ASIC’s decision to ban him, and confidentiality orders.

Vasmos said “On the other side of the ledger”, Freedom had been “diligent” in chasing potential contingent assets, eg reimbursement claims from the company’s insurers for legal costs and disbursements the company had incurred related to professional indemnity claims, Royal Commission costs and ASIC’s investigation.