Victims of Freedom Insurance’s high pressure sales tactics may wait months for compensation

The company that sold insurance to a young man with Down syndrome has a big compensation fund to repay victims of its high pressure sales tactics, but those affected face a lengthy wait.

Freedom Insurance chief operating officer Craig Orton leaves the banking royal commission in Melbourne in September last year. Picture: David Geraghty/The Australian

The company that sold junk insurance to a young man with Down syndrome is believed to have set aside up to $4 million to pay back victims of its high pressure sales tactics.

But it is understood those due compensation will still have a wait as the corporate cop completes its investigation of Freedom Insurance and its boiler room call centres.

The finance royal commission in September last year shed light on the tactics employed by Freedom.

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The commission was played phone recordings of a Freedom salesman pressuring a young bloke with Down syndrome to buy junk insurance.

Commissioner Kenneth Hayne was moved by the recording of the 26-year-old man battling to extricate himself from the policy he had been badgered into buying.

The commission heard from the boy’s father, baptist minister, Doncaster-based Baptist minister Grant Stewart, who said he struggled to get the company to cancel the policy despite repeated phone calls and emails.

Grant Stewart, gave evidence to the banking royal commission. Picture: Stuart McEvoy/The Australian.

Freedom had been teetering since those revelations last year and this month revealed it was basically shutting down after selling off its trail commissions book for $5 million to Zurich based reinsurance company Swiss Re.

It is understood after a strategic review of Freedom by professional services firm Deloitte that a figure between $3 million to $4 million was set aside.

ASIC is completing its investigation of Freedom as it assesses the impact of tactics in customers.

To unleash the compensation to customers ASIC will need to approve Freedom’s remediation plan approved and have an independent expert appointed.

An independent expert is required by law to “give comfort to ASIC” that the plan is framed and delivered properly.

Talking to the Herald Sun, Freedom chairman Pauline Vamos said she wanted to ensure policy holders, staff and shareholders were all protected under the wind down. “It has taken hard, hard work,” Ms Vamos said.

Vamos, a former chief of the Association of Superannuation Funds, only joined the board in November after the issues of the royal commission saw it hit troubled waters.

In August last year, the corporate cop said it would crack down on the sale of life and funeral insurance due to aggressive sales tactics in the sector.