The Australian Securities and Investments Commission (ASIC) says it has commenced court action against two former Freedom Insurance executives, alleging they breached conflicted remuneration and other laws to drive sales at the expense of clients.

ASIC says in a statement today that ex-MD Keith Cohen and ex-Quality Control Manager Robert Oayda were involved in decisions that saw sales agents qualify for overseas holidays if they reached certain targets and a Vespa scooter if they made the most sales.

The regulator filed the proceedings against the duo in the Federal Court, seeking declarations, civil penalties, injunctions and declarations against Mr Cohen and declarations and injunctions against Mr Oayda.

The ASIC action comes after Freedom Insurance sales tactics were exposed during the Hayne royal commission hearings in 2018. Freedom Insurance was placed in administration in February last year.

ASIC had commenced an investigation into the business prior to the royal commission’s final recommendations made in 2019.

“The impact of incentives when selling financial products has been a longstanding issue for ASIC,” Deputy Chairman Sarah Court said.

“We are concerned that incentives may cause sales agents put their own need for sales and reward above the needs of their customers.”

ASIC in its concise statement lodged in the court alleges the breaches took place between November 2017 and October 2018.

During the relevant period, Mr Cohen and Mr 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,” ASIC said.

The products at the centre of the incentive program include final expenses insurance, accidental death and accidental injury insurance.

Click here for the concise statement.