Steadfast Group Ltd (ASX: SDF) shares remain in a trading halt on Tuesday as the company responds to media reports about its conduct.
Shares in the insurance network were halted yesterday after serious allegations were raised against the company in an Australian Broadcasting Corporation (ABC) investigation.
The bombshell claims involve accusations of undisclosed schemes and misleading clients. At the time of the halt, Steadfast shares were trading at $5.96.
Now, Steadfast has responded to the claims with a company-issued statement. Let's have a look.
Steadfast shares remain frozen
The trading halt in Steadfast shares comes in response to claims made by the ABC's Four Corners program this week.
As my colleague Seb noted, the reports include accusations that Steadfast funnelled undisclosed kickbacks from strata insurance commissions to management firms. This allegedly occurred without the knowledge of the apartment owners, who bear the cost.
Furthermore, the investigation suggests Steadfast brokers may have misled clients by not disclosing cheaper insurance options offered by rival companies.
The Australia Competition and Consumer Commission (ACCC) has also reportedly been drawn into the matter.
ACCC chair Gina Cass-Gottlieb said the undisclosed arrangements were "deceptive" and even called for a ban on strata insurance commissions.
Company's response
Steadfast shares remain on ice after the company issued a statement after the close on Monday. It thoroughly denied the allegations and refuted claims of unethical conduct.
The company expressed disappointment in what it described as 'selective reporting' by the ABC.
Steadfast Group refers to matters raised by the ABC in this morning's media. We refute the allegations made and are disappointed that important information has been selectively presented. Steadfast provided the ABC with information on 29 August and 4 September 2024, which was not included in the coverage to date.
In addition, Steadfast refutes the ABC allegation that our brokers are "misleading" customers.
Steadfast also detailed what it called the "facts" around its dealings with insurance broker BCB, noting it complied with NSW law.
It also mentioned that "equity-owned strata insurance brokers" contributed around 5% of the group's FY24 pre-tax income, and operate independently.
Steadfast is fully committed to a transparent and competitive marketplace that delivers the best value to customers. All of Steadfast's businesses, including brokerages and underwriting agencies, operate independently and actively compete with each other.
Steadfast CEO Robert Kelly stated that the company holds itself to high professional and ethical standards.
Steadfast is naturally concerned about any case that may fall short of our standards and expectations.
Should instances be raised that require further action, we will of course investigate and act to rectify any shortfalls in our processes and procedures.
Steadfast supports the New South Wales Government's strengthening of current legislation, and
increased oversight over the strata industry.
The company says it will update the market when deemed appropriate. For now, Steadfast shares remain on ice until further notice.
Foolish takeaway
Steadfast shares remain frozen on Wednesday as the company responds to allegations of misleading customers.
In the past 12 months, the stock is up 8%, having climbed 2% this year.
