Steadfast Group Responds to Allegations Following Four Corners Investigation

Highlights:

• Allegations of Kickback Schemes: Steadfast Group (ASX: SDF) faces claims of participating in undisclosed schemes, giving strata management firms a cut of insurance fees paid by apartment owners.
• Investigation Concerns: The Australian Competition and Consumer Commission (ACCC) has expressed concerns following allegations that Steadfast brokers concealed cheaper insurance options, recommending higher-priced policies from Steadfast-owned firms.
• Steadfast Denies Claims: Steadfast has rejected the accusations, asserting that key information was omitted from the investigation and reiterating its commitment to ethical business practices.

Allegations of Misleading Practices Surface

Steadfast Group (ASX: SDF), one of Australia’s largest insurance broking companies, has come under scrutiny following an investigation by ABC’s Four Corners. The investigation unveiled accusations that the company was involved in undisclosed schemes, allowing strata management firms to receive kickbacks from the fees apartment owners pay. Allegedly, these opaque deals led to higher premiums for clients, with some brokers concealing lower-cost insurance options in favor of policies from Steadfast-owned firms.

Concerns Raised by Regulatory Bodies

The Australian Competition and Consumer Commission (ACCC) has shown interest in the case, raising concerns about the company’s conduct. The investigation also pointed to Steadfast’s aggressive expansion in the strata insurance sector, which now contributes more than 20% of the group’s profits. This rapid growth, achieved through acquisitions, has drawn regulatory and public scrutiny.

Steadfast Rejects Allegations

In response to these claims, Steadfast has categorically denied the accusations, stating that important information provided to Four Corners was selectively omitted. The company clarified that its equity-owned strata insurance brokers accounted for only 5% of the group’s earnings in FY24, with operating margins in line with non-strata products.

The company further emphasized that it adheres to stringent professional and ethical standards. Steadfast CEO Robert Kelly expressed concern over the situation, stating that any case falling short of the company's standards would be investigated thoroughly.

Market Reaction and Next Steps

Shares of Steadfast Group were placed on a trading halt pending the company's detailed response. Steadfast reaffirmed its commitment to working with the NSW government to strengthen legislation and improve transparency in the strata insurance sector.

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