Unethical Practices in Freedom Insurance Case

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Financial accounting
Name
Institution
Date

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Executive summary
The royal commissioner released the final report as well as the case study reports of the
financial service companies in Australia. The royal commissioner addressed several challenges
he had identified in the field including fraud, law-breaking, unethical conducts as well as poor
rewarding practices. Freedom insurance is one of the companies that submitted their case before
the royal commission. The royal commission identified several failures which the company was
operating with including illegality, unethical practices, and poor retention as well as punishment
system. Several incidences were highlighted by the commission which will be very critical in
assisting the setting of accounting standards as well as rules to govern the industry. This case
represented a global perspective of most industries and provided for a chance for changes to be
initiated. This report was aimed at the analysis of one of the Australian financial service form
which was studied by the royal commissioner during the release of the final report in 2017.
Freedom insurance was selected as one of the firms which had most of the unethical practices in
Australia. The paper outlines the incidents of unethical behavior as well as the future of the
industry after the discovery of this case. Finally, the report covers a personal reflective essay
which is related to the case of freedom insurance.
PART A
Freedom insurance
This is the case of one of the financial institution which offers financial services in
Australia. The company presented their c their cases before the royal commission for evaluation
and this is the report of the findings of the royal commissioner on freedom insurance case.
Freedom insurance used to market and distribute insurance policies in a direct way to their

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customers which was done through telephone calls. Mr. Olton was the chairman of the firm by
that time and in the sixth round of hearing, he presented the firms' evidence that they had
refereed from marketing and selling insurance policies and had only remained with funnel
insurance policy (Australia. Royal Commission into Misconduct in the Banking; Superannuation
and Financial Services Industry. 2019 p298). Having made such a critical decision and the
company was one of the listed financial firms in the country the firm had failed to publish the
decision.
According to the royal commissioner, the evidence was easily disbelievable as there
existed no evidence that the company had changed her business structure. Clear evidence was
referred by the royal commission; the case involved the sale of a life insurance policy over the
phone to a son who was vulnerable as he was disabled. Mr. Stewart son was contacted through a
phone call and he was forcefully sold the insurance cover as the agent who contacted him
collected the credit card number of the son and made the deductions to cater for the policy.
Following the case Mr. Stewart had a great challenge to connect to the agent who sold the cover.
Moreover, the firm displayed a very poor customer response through delaying in answering Mr.
Stewart queries and also the failure to pick their customers' calls.
Freedom insurance was guilty of its conduct of being more self-centered than being
customer centered. Freedom insurance was listed as being one of the firms which broke the
accounting standard for one, selling their policies over the phone without considering the health
and mental statue of their customers. The firm was only aimed at making the sale without the
concern of the law of the land. There was a lot of error in the operation of the firm as Mr. Orton
witnessed that there was a great gap of lack of quality assurance for the policies which were sold
over a phone call. Another issue which arose in freedom insurance was downgrading the sale

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practices of selling death policies as well as accident policies. The company had downgraded this
through h selling the 0ppolicies to persons who were not qualified for the policy.
Moreover, freedom insurance was selling their accident death policy to individuals who
had attempted to cancel their existing policy on life insurance. The chairman confirmed that this
sale was deficient as it lacked important information on the policy being sold. Moreover, another
issue that the royal commission found out was that the firm had relegated customer service to a
second position. Moreover, the disciplinary action taken on the agents found guilty of their sale
actions were not held accountable for their mistake neither were they punished or expelled.
Hence the royal commission indicated that the firm was operating below the standards of
operation in the financial market. Moreover, the retention procedure of the company failed below
the social expectations. As there were more than reported cases of disciplinary but the firm
retained the guilty employees.
From the short case analysis, there are a lot of ethical misbehaviors which can be derived
from the case of freedom insurance. First of all, was the sale tactic which the company used. As
a service company which sells on-tangible goods the phone call sale is very unprofessional as
well as unethical. A phone call that was made to Mr. Stewart son and the series of events which
followed after collection of personal information is very unethical. The agent who performed the
sale of life insurance cover to Mr. Stewart son made a mistake by collecting the credit card
number of the customer and he made the purchase on behalf of the customer. Moreover, having
communication phone call the agent failed to collect all the relevant information about the
customer.