The Federal Court has cleared two former Freedom Insurance executives accused of misconduct by the Australian Securities and Investments Commission.

ASIC alleged that Keith Cohen and Robert Oayda acted unlawfully between November 2017 and October 2018 through their involvement in the Freedom Group’s sales incentive programs.

Mr Cohen was director and Mr Oayda was quality control manager of Freedom, which hit financial trouble after its life insurance sales tactics were exposed during the 2018 Hayne royal commission.

The business was placed in administration in 2020 and deregistered.

The regulator’s case centred on a sales incentive scheme for a product called Freedom Protection Plan that was sold by agents working from a call centre. Agents who met sales quotas were given Bali holidays and Vespa motorcycles. 

In the proceedings filed in 2021, ASIC alleged the former employees broke conflicted remuneration laws by engaging in misconduct that prioritised insurance sales over customer needs.

The commission also accused Mr Cohen of breaching his director duties by, among other things, failing to take reasonable steps to prevent Freedom from breaking the conflicted remuneration laws.

Justice Scott Goodman said in his ruling: “ASIC has framed its case that the prizes were ‘conflicted remuneration’ … ASIC had not established that the sales agents were providing financial product advice.

“However, it does not follow from that conclusion that the sales agents were not providing financial product advice.

“The true position is that ASIC has proven neither the positive nor the negative proposition.”

Justice Goodman said this conclusion means “neither Mr Cohen nor Mr Oayda could have been involved in the pleaded contraventions … Thus, it is unnecessary to address the questions of … whether Mr Cohen and Mr Oayda were involved in the pleaded contraventions.”

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