Steadfast and its former network member PSC have agreed to settle a legal dispute over rebate payments. 

PSC had alleged breach of contract and misleading or deceptive conduct. Steadfast denied the allegations and said in its half-year report that “no liability (or any potential insurance recoveries) has been recognised for the PSC matter”. 

It has since told insuranceNEWS.com.au “the matter was agreed to settle last week”, but the terms of the settlement have not been disclosed. 

As previously reported, the listed insurance groups parted ways last year, with Steadfast CEO Robert Kelly saying he saw PSC as “friends … not enemies”.  

But PSC Reliance Pty Ltd, a wholly owned subsidiary of PSC Insurance Group, began legal proceedings against Steadfast and Mr Kelly in October, and the matter was listed for a case management hearing at the Federal Court on May 13.

PSC’s statement of claim, seen by insuranceNEWS.com.au, said that since 2009 Steadfast had received a fee from insurers and underwriters when its network brokers arranged partner products, and a percentage of this was rebated to network brokers.

In July 2019 Steadfast offered network brokers the chance to exchange future rebates for cash or Steadfast shares. PSC said it was offered a multiple of 8.32 times the rebate for the financial year ending June 30 2019 in exchange for renouncing its future rebate entitlements. 

It said Steadfast confirmed that if PSC did nothing it would still be eligible to receive the rebates, while noting they were “discretionary”. 

Melbourne-based PSC said in its statement of claim that it did not accept the offer, relying on a representation from Steadfast that it would continue to pay the rebates.  

It said Steadfast wrote to the company in December 2019 saying: “This is the last year these fees will be paid.” PSC was paid more than $2.5 million as the rebate for the financial year ending June 30 2020, but no rebates were paid thereafter.  

The broker alleged it suffered loss and damage as a result. If it had elected to receive Steadfast shares under the offer, these shares would now be worth more than $28 million. 

In a document outlining their defence, Steadfast and Mr Kelly denied making such a representation. They also denied the allegations of breach of contract, misleading or deceptive conduct, and estoppel, saying the rebate of fees to PSC was discretionary. 

insuranceNEWS.com.au understands that while the parties have agreed to settle, there is still some administration to finalise.