The Albanese government has announced an estimated $4m in emergency relief for hundreds of Aboriginal families who have been left without money to pay for their loved ones’ funerals after the collapse of disgraced insurer ACBF-Youpla earlier this year.
The Minister for Indigenous Australians, Linda Burney, said traumatised and grieving families would now be able to bury their loved ones.
“There are many Aboriginal people in morgues,” she said, while announcing the scheme.
Burney said the company was “despicable” and had left families who had paid into funeral funds for years believing their loved ones would be buried with dignity.
“This company has breached its moral responsibilities, it’s breached its cultural responsibilities and has breached the trust of thousands and thousands of First Nations people,” Burney said.
Under the federal government scheme, announced by Burney and financial services minister Stephen Jones on Monday, people who held policies with ACBF-Youpla as of 1 April 2020 will receive a payout for funeral expenses equal to the one they were originally promised by the company.
The scheme is an interim measure designed to provide urgent relief for families that need to pay for funerals now. Guardian Australia revealed in June that at least 31 families have been left without the means of paying for funerals, or had to leave their loved ones in the morgue while they raised the funds, after the company collapsed in March, taking with it all they had paid into the fund.
It comes as the Australian Securities and Investments Commission is intensifying an investigation into the conduct of current and former directors of the funeral fund, including founder Ron Pattenden, who is now believed to be in Vanuatu. Asic is also pushing ahead with a lawsuit accusing the company of misleading clients.
The interim scheme will be open until 30 November 2023 and provide urgent relief for about 500 Indigenous families while the government considers a permanent solution.
Details of how payments are to be made, and how soon the money can flow, are still to be worked out, but it is believed the government will use either or both the National Indigenous Australians Agency and the Australian Taxation Office to reimburse families.
Families will be able to register on the Treasury website.
The cut-off date of 1 April 2020 was chosen because that is the date from which ACBF-Youpla was legally prevented from taking on new members.
The Save Sorry Business Coalition, representing thousands of affected policyholders, said it is looking forward to working with the government to develop an “enduring resolution” for the remaining policyholders over the next 18 months.
“Previous successive governments failed to offer any meaningful assistance – and the last government suggested that First Nations elders could have a pauper’s funeral, which was culturally devastating,” Mark Holden, Dunghutti man and Aboriginal solicitor at Mob Strong Debt Help, said.
“We look forward to working with the federal government to assist all remaining policyholders to avoid further trauma and intergenerational debt,” Holden said.
What is ACBF/Youpla
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- The Aboriginal Community Benefit Fund (ACBF) was a Gold Coast-based private business that for decades aggressively sold funeral insurance almost exclusively to Aboriginal people, including children and babies
- At its peak ACBF had about 25,000 clients. Trading as Youpla, it had 13,000 clients at the time of liquidation, all of whom face losing the money they paid in
- Contributions of active members to the three funds totalled $39.2m
- The liquidator, SV Partners, says there is just $11.9m left – the largest fund (Fund 3) has just $207,000
- ACBF-Youpla was investigated by NSW’s Department of Fair Trading in 1992 and by the financial services regulator, Asic, in 1999, 2004 and 2014, but the business was allowed to continue
- The company became a case study at the banking royal commission in 2018
- Changes implemented following the royal commission led to Youpla being unable to sell to new customers without a licence
- The financial ombudsman, Afca, has received 700 complaints about Youpla group since 2018, and issued 178 decisions to date, all in favour of complainants citing misleading or deceptive conduct
- Afca estimates it has awarded more than $1.4m in compensation, but 61 determinations remained unpaid, worth around $500,000
The collapse has left thousands of mostly low-income Aboriginal people, some of them elderly and in palliative care, without coverage. People had paid between $3,000 and $30,000 into the fund during its time of operation, from 1992 to 2022.
ACBF-Youpla targeted Indigenous people using marketing materials in the distinctive red, black and yellow colours of the Aboriginal flag, including stuffed toys and colouring books for children, and by conducting door-to-door sales.
Guardian Australia reported in May that senior managers knew of an allegation of at least one salesperson’s aggressive tactics. Senior managers were notified in an email from a staff member, alleging they had witnessed the salesperson using racist slurs to describe Aboriginal clients, and alleging the salesperson told them: “We aren’t here to show them respect or dignity. We are here to get money from them”.
At its peak, ACBF-Youpla had about 25,000 members. In some communities, about 30% of people, including children and babies, had been signed up to the fund. The worst affected was the north Queensland town of Yarrabah, where 786 people have been left facing the loss of everything they had paid into the fund.
Yarrabah Aboriginal shire council mayor, Ross Andrews, called it a “massive betrayal” of his community.
The collapse has also left at least 31 families without the money needed to bury loved ones. The Save Sorry Business Coalition of consumer groups, representing thousands of affected policyholders, estimates that those 31 families are owed $236,089 in unpaid funeral entitlements, amid reports that families are crowdfunding and collecting cans to pay for burials.
The announcement of the interim scheme comes as Asic is pursuing action over ACBF-Youpla on two fronts: an investigation into potential breaches by directors and former directors, and legal action against the company alleging misleading and deceptive conduct in the way it sold its products.
The investigation is believed to be a high priority within the regulator.
Locals have reported seeing Pattenden in Port Vila, the capital of Vanuatu, where Guardian Australia last week located his luxury yacht, the Dream Catcher.
In a report filed with Asic last month, the company’s liquidator, David Stimpson of SV Partners, said directors of the group may have committed criminal offences by breaching their duties to it.
“There are possible legal actions to take against former directors, however, the amount and chances of success is currently uncertain. I will be seeking funding and/or assistance to pursue these claims,” Stimpson said in the report.
This week, he told Guardian Australia that “investigations into Mr Pattenden and his related entities are ongoing, including liaising with the appropriate government bodies to assist”.
The separate legal action by Asic against ACBF-Youpla, alleging misleading and deceptive conduct, is continuing after federal court judge Jayne Jagot last week gave permission for it to go ahead.
Asic needed court permission because the group is in liquidation.
