Observations from Royal Commission on Freedom Insurance Group Ltd.

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Professor
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After the royal commission investigation into the banking and money industry in
Australia, the following four observations were made in return. The first observation by the royal
commissioner was the connection which was used by the highest percentage of industries in the
financial service industry, between the conduct of their employees and the reward which was
given in return. The royal commission made an observation that the unlawful policy as well, as
bank services sellers received the reward regardless of their illegal trading (Royal commission
final report, n.d.). The second observation was the symmetry of information as well as power
between the financial institutions and their workers. It was noticed that most companies used
brokers and hence the flow of information never existed.
Also, the commission observed a conflict that rose in between interest and duty. It was
found out that employees were in a race to raise their incomes through commission and the banks
and insurance companies were targeting on raising their revenue hence relegating customer
services. Employees were only interested in their daily income rather than the satisfaction of a
customer while the companies were also concerned with their revenue yield. Lastly, the royal
commission made an observation that most of the financial service companies took advantage of
the market freedom and there was no law which hunted them (Royal commission final report,
n.d.). Moreover, the company employees were not taken into account of their misconduct and
there was a need to improve and change the reputation of Australia financial industry.
One of the financial service company that was covered under the case study and its
conduct was regarded as unlawful by the royal commission was the freedom insurance group
Ltd. This company was reported to have conducted against the law of the industry. Among the
misconducts which were unveiled by the commission were; lack of official communication and
documentation. This was as a result of the change of the company sale policy but no

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documentation was recorded. The second failure was the lack of quality assurance in the services
and the packages the company was selling through telephone calls. Finally, the company was
regarded as unlawful from its failure to take actions and hold individuals into account as a result
of their misconduct.
Freedom insurance was acting against the ethics rule and also practiced against then
society expectations. Several cases indicate the misconduct of the company and the performance
against the expectation of society. The famous case which the royal commission used in the case
study is one of the indicators that the company was acting and operating against the community
expectation. Mr. Stewart son was sold an insurance policy over the phone as it was usual in the
company. The wrong part of this transaction is that Mr. Stewart son had a mental problem and
the agent who was selling the policy never bothered to identify the features of the customer she
was talking to (Royal commission final report, n.d.). To make the matter worse the insurance
agent asked for the credit card number and initiated the sale of the life insurance to the son. This
act was an indicator that the company agents used to take advantage of the vulnerable customers
in the society.
Another instance is the lack of proper communication through documenting every policy
decision the company made. The commissioner clearly indicates this to the CFO Mr. Orton that
the decision cannot be relied upon as it was from a word of mouth. Moreover, the company
promoted and rotated its agent once a complaint aroused in one department, more than twenty-
seven cases of misconduct had been reported to the company and not even a single employee
was taken into account. Finally, the company CFO also indicated that the company lacked
quality assurance of the traded policies. This was a clear indication that customer value had been
lost in the company.