Linda Burney will make an investigation into the predatory funeral fund ACBF-Youpla one of her “highest priorities” on taking over as Indigenous affairs minister, after Guardian Australia revealed new details of its collapse, which left more than 13,000 people facing the probable loss of everything they had paid into the fund.
“I assure people that this is the top of my agenda, probably the first thing that needs to be resolved, and I will do that carefully,” Burney told Guardian Australia.
“I understand that for some families, the pain they’re in, and the fact that they thought they would be able to bury their loved ones in comfort, and now find that their loved ones are still in the morgue after a very long time, is totally unacceptable.”
Youpla, previously known as the Aboriginal Community Benefit Fund, was a Gold Coast-based private business that for decades allegedly aggressively sold funeral insurance almost exclusively to Aboriginal people, including children and babies.
Member contributions to the three funds at the time it collapsed totalled $39.2m. The liquidator said there was now just $11.9m left and it remained unclear whether any contributors would see a refund.
Before the election, Labor promised it would hold an inquiry into the operation of the business and would explore whether there was a role for the government in assisting the thousands of affected families.
Burney said she would immediately begin looking at options for a government response.
What is ACBF/Youpla
-
- 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
“I don’t know what the resolution is precisely, but there has to be one found,” she said.
In 2019, Burney and then shadow assistant treasurer, Stephen Jones, wrote to the Morrison government to warn that vulnerable clients would be “ripped off twice” if ACBF-Youpla were to become insolvent.
“I also raised this directly with the ex-treasurer, ex-member of parliament, Josh Frydenberg, when things were clearly going belly-up, and have not ever received a response or an invitation to have that discussion,” Burney said.
“Now it’s happened and thousands of families are disenfranchised, there needs to be a resolution found.
“An investigation is absolutely warranted and it is one of my highest priorities,” she said.
‘They really want justice’
On Tuesday, Guardian Australia revealed that the founder and former director of the company, Ron Pattenden, had received more than $20m in tax-free income from the business through a complex web of offshore companies in the decade since 2010. The payments were made up of dividends due to him as a shareholder, payments of premiums for insurance to one of his Vanuatu companies and, after he sold the business to new operators in late 2018, money he continued to receive as instalments on the purchase price.
Pattenden has amassed significant personal wealth over the years, including a luxury yacht and properties in New Zealand and Vanuatu.
The former liquidator of one of Youpla’s funds, Roland Robson, raised concerns in a late 2021 report to creditors filed with the corporate regulator that Pattenden may have misappropriated money from it.
“My enquiries with the current directors of the company revealed that the former director of the company [Pattenden] may have misappropriated a large amount of the company’s funds by the way of the dividend payment to himself or related entities over a number of years,” Robson said in a report into the affairs of Youpla’s Fund No 2, which collapsed in December. The allegation is in a section of the report examining whether certain payments made by the company can be clawed back to pay creditors.
Pattenden did not respond to detailed questions about the issues raised in this report, and it is not known if he disputes the allegation.
The Australian Securities and Investments Commission declined to respond in detail to Guardian Australia’s report.
“Asic is indeed investigating the performance and conduct of past and current directors of ACBF/Youpla,” a spokesperson said.
“And as such, in accordance with Asic’s general policy, we would prefer not to comment further.”
The Greens have called for the new government to immediately commit to underwriting all funerals – particularly those of families who are now having to crowdfund to raise money for funeral services.
The Save Sorry Business coalition, which represents more than 100 community and legal organisations supporting the thousands of affected families, said a compensation scheme is urgently required so that funerals of loved ones can go ahead.
“This has been happening for such a long time,” said Samantha Rudolph, the Aboriginal policy officer at the Consumer Action Law Centre, which is part of the coalition.
“We’re kind of just at the point where we just need urgent compensation for people.”
She said Asic should continue its investigation of Youpla’s former directors because members of the community want justice.
“They’ve heard about the directors having a lot of money now, coming out tax free,” she said.
“They are also very, very angry because they’re the ones who paid all this money and are now sitting in morgues, unfortunately.”
The coalition is also calling on Asic to go ahead with legal action against Youpla, which is due back in court on 16 June, despite the company’s collapse.
“We’re going based on what the community wants and so not only do they want compensation, but they really want justice, for what’s happening,” she said.
Asic launched the federal court lawsuit in October 2020, accusing Youpla of engaging in misleading and deceptive conduct towards potential customers.
The company’s marketing material was misleading and deceptive because it said the group was run by Aboriginal people, approved by the Aboriginal community, better than other funeral insurance products on sale and told plan holders they would get a lump sum payout when they would actually only get reimbursed for funeral expenses.
Youpla denied the allegations and the case was moving towards a trial, but progress stalled after the group collapsed into administration on 11 March.
