APRA ‘has concerns’ over Freedom taking over St Andrew’s, says ASIC

APRA has told ASIC of its concerns over Freedom Insurance’s ­attempted acquisition of Bank of Queensland’s insurance division.

The prudential regulator has told the corporate watchdog of its “concerns” over predatory life ­insurer Freedom Insurance’s ­attempted acquisition of Bank of Queensland’s insurance division St Andrew’s, it was revealed ­yesterday.

Documents shown to the royal commission reveal that the Australian Securities & Investments Commission as recently as May “urgently” wanted to serve a ­notice on Freedom as it was concerned about the group’s “ambitious plans to expand” by taking over the St Andrew’s division.

Shares in Freedom crashed to a record low of 12c yesterday, down 20 per cent.

Freedom is making a last-ditch effort to attain an insurance licence so it can underwrite its life insurance policies. It signed a deal to buy St Andrew’s for $65 million, but the deal has not yet gained ­approval from the Australian Prudential Regulation Authority.

In the file note, following a meeting with Freedom in May, ASIC recounted that Freedom was “far worse” than a previous insurer it had probed and its bad conduct was “still live” and that the group “needs (an) APRA licence” to continue to write life insurance policies.

ASIC has previously investigated outbound life insurer Select AFSL, which was distributing St Andrew’s life insurance products, and uncovered a mountain of misconduct and potential legal transgressions by its high-pressure sales staff that included forcing largely useless policies on Aboriginal and Torres Strait Islander ­people.

In the file note, ASIC said of the St Andrew’s acquisition that: “APRA has some concerns about the proposals so far”. APRA and the Bank of Queensland have repeatedly declined to comment on the takeover when asked by The Australian.

APRA was lambasted at the royal commission last month for failing to take legal action against companies it knew to be in breach of the law and for allowing known criminal breaches to continue for years unaddressed.

Mr Orton told how St Andrew’s business would empower Freedom Insurance to have a broader business. “The St Andrew’s business is a strong business for loan protection-type business,” he said. “The management team is a strong team. Having both general insurance and the life company means you can develop products that are industry-leading.”

Freedom Insurance is planning to snub ASIC by continuing to push sales of its predatory funeral insurance policies through its outbound call centres, a process that had been banned by the regulator last month.

Freedom made the snap decision to junk its sales of accidental death insurance, accidental injury insurance, trauma insurance and life insurance just hours before it faced brutal scrutiny from senior counsel assisting Rowena Orr QC.

But the company decided to continue selling funeral insurance despite the regulator’s instruction last week for companies to cease the sale of life insurance through outbound call centres under threat of legal action. It will also continue to sell accidental death insurance policies through “inbound” calls, despite ASIC threatening to ban the product.

Regulators have found funeral insurance to be a problematic product, often sold in tandem with high-pressure sales tactics and a litany of exclusions that render it largely useless.