Giant listed insurance group Steadfast has entered a trading halt as it prepares to issue a statement in response to allegations published today as part of the ABC’s strata industry exposé.

As insuranceNEWS.com.au reported last week, the ABC’s Four Corners program, entitled The Strata Trap, is due to be broadcast at 8.30pm today.

But this morning, the ABC News website led with a story accusing Steadfast of “misleading clients”.

The ABC reports allegations that a Steadfast brokerage “buried” a cheaper strata insurance quote and recommended a client take a “more expensive” policy from a Steadfast-owned strata underwriter.

Steadfast CEO Robert Kelly disputes the allegation, arguing the other underwriter withdrew its offer, and is interviewed as part of tonight’s program.

A note to the Australian Securities Exchange this morning said a trading halt was necessary “as Steadfast expects to make an announcement to the ASX in connection with an ABC article published today”.

The note says the halt will end either when the announcement is made or when trading opens on Wednesday.

The ABC article also looks at Steadfast’s involvement in joint ventures with strata managers, which enable a share of broker fees to be passed to managers without them being declared.

This issue and other concerns around strata remuneration transparency have previously been raised by industry consultant John Trowbridge, in an industry-wide report commissioned by Steadfast.

In the report, Mr Trowbridge describes the issue raised by the ABC as “the composite commission and broker fee system”.

He says this system is “where a jointly operated intermediate entity receives commissions and broker fees and either shares them as fees on a policy-by-policy basis or accumulates them and then periodically passes them to the strata manager and broker as dividends, profit shares or similar”.

The report recommends such arrangements be phased out – along with any remuneration set-up where broker commissions are rebated to strata managers and a broker fee is charged on top.

Mr Trowbridge told insuranceNEWS.com.au today he stands by his report, but he pointed out Steadfast is not the only company involved in such arrangements.

“There is an emphasis on Steadfast in the ABC article – but the irony is that Robert Kelly knew there were problems and that’s why I was commissioned to do the work. The conflicts of interest around brokers and strata managers are certainly not confined to Steadfast, and are widespread throughout the industry.”

At Steadfast’s recent results briefing, Mr Kelly said action was under way to address Mr Trowbridge’s concerns.

“We acknowledge the issues highlighted … and to demonstrate our leadership in the strata industry, we’ve undertaken a review of all of our businesses,” he said.

“We commenced that, we’ve implemented. I’m not going to say to you that all the businesses were absolutely perfect.

“We looked at what Trowbridge said, we overlaid it over our businesses, and we found, in some cases, some gaps. And we worked about rectifying those gaps. Sometimes those gaps will take 12 months to unwind, but the thrust of our business is to make sure that’s done.”

Mr Kelly appeared to pre-empt the ABC allegations, saying Steadfast does not direct its brokers to place business with its underwriting agencies.

“We do not direct any placement of business to any of the group’s other assets – quite the reverse.”

The ABC quotes Australian Competition and Consumer Commission chair Gina Cass-Gottlieb as saying strata insurance commissions should be banned.

The commission previously argued commissions more broadly should be axed, in its 2019 report on insurance affordability in northern Australia.

The Four Corners program is expected to address other issues in strata beyond insurance.