A company accused of misleading vulnerable Aboriginal people to sell low-value funeral insurance, including cover for children and babies, is now being sued by the Australian corporate regulator for allegedly deceptive conduct.
The action by the Australian Securities and Investments Commission comes amid concerns that if the company is unable to pay the compensation required, or becomes insolvent, the policies of the 13,000 mostly Indigenous clients it still has on its books would be lost.
The Aboriginal Community Benefit Fund (ACBF) is a Gold Coast-based private business that for decades has allegedly aggressively sold funeral insurance almost exclusively to Aboriginal people.
As previously reported by Guardian Australia, ACBF would deduct money from Centrelink payments before people received them – which was then legal but is now illegal – and deny payouts for suicides.
Late last month, Asic took action in the federal court against the company for allegedly misleading and deceptive conduct between 2015 and 2018.
Asic alleged that the fund’s marketing and sales materials falsely led people to believe they were paying into an Aboriginal community-run fund that would help pay for their funerals. Many people signed up for themselves and their children, including babies, allegedly paying more over time than the policies were worth.
Asic is “seeking declarations, injunctions to prevent further contraventions, civil penalties and adverse publicity orders”.
The action comes as dozens of individual claims for refunds have been lodged with the Australian Financial Complaints Authority (AFCA).
Community legal advocates in Victoria and New South Wales say there are up to 50 cases ready to be heard. The authority has already ruled on a couple of cases and has been scathing about the company’s conduct.
“The ACBF acronym is for Aboriginal Community Benefit Fund. The words themselves evoke an Aboriginal community, a benefit for that community and [that] the benefit is supported by a fund,” it said in one decision.
“However, the premiums were not paid savings nor was the plan an investment product. The payments were not for a purpose: the payments were directly to ACBF as a corporation. There was no fund, no trust fund and no trust.”
In another decision it said: “The ACBF is a corporation whose legal purpose is the benefit of its shareholders. It has none of the characteristics evoked by its name.”
ACBF had around 25,000 clients, predominantly Aboriginal and Torres Strait Islander people. Now rebranded as Youpla, it still has 13,000 clients, but since April has been unable to sell new insurance.
Under regulations introduced after the banking royal commission, funeral insurers must have a licence to operate. In late April, Youpla told a Senate hearing it applied for such a licence twice but has been refused.
The company has been contacted for comment regarding the latest court case, the allegations made about its conduct and its views on compensation as ordered by AFCA.
A sorry business
Many elderly Aboriginal people feel shame that they have allegedly been taken in by this conduct, the Financial Rights Legal Centre says. But Aboriginal people are especially vulnerable when it comes to anxieties about how to pay for funerals.
“Sorry business is a culturally important period for Aboriginal communities to mourn the loss of the loved one, and it can affect to the whole community because sometimes one person will pass and then someone else will pass as well,” the centre’s Aboriginal services co-ordinator, Amanda Cameron, says.
“Financially it’s a really big hit for communities. Sometimes the cost of a funeral can be anywhere from $4,000 to $25,000. And having those sort of funds available at any one time is very hard.”
The centre has seven clients who have lodged cases against ACBF with the financial regulator AFCA.
Recent determinations include:
A mother who had three children aged six, eight and nine years when she signed them up in 2006. She was visiting her father’s house in Queensland when an ACBF representative turned up at the door. She considered ACBF was an Aboriginal organisation, particularly given its name and logo. The ACBF representative completed the application form and health statement and showed her where to sign them. She was not told how the fund operated and she was not told that premiums would increase as she and her children grew older. She paid $25.50 a fortnight until her plan was cancelled in 2018, when she fell behind on payments. AFCA ordered the woman and her four children be repaid $7,116.46 plus interest. AFCA also questioned the forms that were filled in, noting that “even to the untrained eye” the signatures on two forms she was supposed to have signed were different.
A woman who, at the time she signed up for the plan in 2006, had just turned 20 and had experienced homelessness. She said she was sexually assaulted at the age of nine, and by 13 was using alcohol and drugs. She suffered from PTSD. She left school in year nine, had limited employment experience and always relied on government benefits for income. She had no experience with savings, investments or insurance. The regulator said ACBF should have known the woman’s mental state “was most likely unstable and not sufficient to deal with any verbal or written material from the representatives”. The ACBF failed to deal with her as a vulnerable person and as a result she suffered loss or damage that ought to have been avoided. AFCA ordered the woman be refunded her premium of $2,705.71.
An elderly Aboriginal woman in NSW, “with limited education and understanding of financial products or financial matters” who said that in 1996 two ACBF employees turned up on her doorstep unsolicited. She thought, because of the name, colours, imagery and Aboriginal flag used in their marketing materials, that ACBF was an Aboriginal organisation. She signed the application and began paying into the fund in 1996. The initial benefit amount chosen was $6,000. A year later, two ACBF agents again turned up at her door, and recommended she increase her benefit level to $10,000. She said she was not told this would mean she was no longer eligible for a refund, and she would not have applied for higher cover had she known. AFCA said she had been misled and said she should be repaid.
An elderly Aboriginal woman who had “a very low level of literacy and had difficulty understanding paperwork” said she would not have signed up for the fund had she known it was not an Aboriginal organisation. AFCA said even if she wanted to leave the fund, she would lose the contributions already made. “The complainant is not in a financially strong position where she could afford that option. She has stated she wants to remain a member of the fund, since she has a $10,000 benefit.”
After ACBF was banned from automatically deducting payments from Centrelink entitlements many Aboriginal clients failed to make regular payments and lost their benefits in the scheme.
“There’s a lot of people who lost everything they’d paid for so long, and we’ve had clients who were signed up way back in 1995,” the Financial Rights Legal Centre’s Mark Holden, a lawyer and Dunghutti man, says.
“It has been very depressing work, because you have people from the community, people who are your mob, who felt like they were getting a good deal out of this, they felt they were dealing with a company that they thought they could trust.
“[The name] gives a very strong impression of it being Aboriginal … when in fact, at that time, it was just owned by a bunch of gubbah [non-Aboriginal] people.”
Appropriate redress
Victorian Aboriginal Legal Service (Vals) intends to file further complaints shortly with the Australian Financial Complaints Authority. Its senior lawyer, Siobhan Doyle, says the determinations are an important way to hold ACBF responsible for the harm it has allegedly caused.
“Aboriginal and Torres Strait Islander people are being exploited by individuals selling unsuitable financial products and are being subjected to unsolicited and high-pressure selling techniques that are resulting in hardship,” Doyle says.
Concerns remain for the thousands of people left in the scheme, who risk losing their money if the company becomes insolvent, or cannot meet its obligations as set out by the regulator.
The banking royal commission recommended that the federal government set up a compensation scheme of last resort, for people to recoup their losses if a financial provider became insolvent owing funds.
Vals, along with other community organisations, is strongly advocating for an appropriate redress scheme.
“If Youpla ceases to operate, 13,000 people with Youpla policies could lose their past contributions and future coverage. Aboriginal and Torres Strait Islander communities should not bear the costs of poor legal drafting, inappropriate legal loopholes and inadequate regulation,” Doyle says.
Holden agrees. “It is something of concern if ACBF were to go under, that would mean that people would end up not having their benefits,” Holden says. “They could end up making all these payments … to get nothing out of it in return.”
