The new minister for financial services has asked Treasury for advice on how to compensate Indigenous people who were victims of the collapse of the funeral expenses fund Youpla.
Stephen Jones, who was sworn in last Wednesday after Labor’s election victory, stopped short of committing the Albanese government to compensating the victims, telling Guardian Australia he first needed to understand how big the problem was.
But he raised the possibility of the commonwealth seeking a financial contribution from the New South Wales government, which had shared responsibility for regulating Youpla with the Australian Securities and Investments Commission.
Jones also said he wanted to see if there was any possibility of clawing back money from Youpla’s previous owner and founder, Ron Pattenden, who Guardian Australia has revealed legally made at least $20m from the company, tax free, over a period of 10 years.
Youpla, formerly known as Aboriginal Community Benefit Fund, ran insurance funds that paid funeral expenses but collapsed in March after Asic wrote to it questioning whether it was able to pay its bills as and when they fell due.
The collapse left some Indigenous families with the bodies of loved ones sitting in the morgue but no money to pay for funerals.
At the point of collapse Youpla did not have enough money to pay all the benefits it promised to about 13,000 fund members whose payments were up to date.
An unknown number of people also paid premiums to Youpla but have nothing to show for it because they stopped paying and the company cancelled their coverage.
Estimates of how much it might cost to compensate people affected by the collapse vary from about $60m to as much as $100m.
“Let’s just say you went down the path of saying this group needs to be compensated – who is the group that needs to be compensated?” Jones said.
“Is everyone who’s ever held a policy? Is anybody who had a policy in the last 12 months? Is it on contract principles and therefore if it’s on contract principles, you refund the value of the premiums paid or refund the insured amount?
“There are so many variables in all of this and that’s before we get started on saying how much is on the Commonwealth and how much is on the state regulator, because for most of the period, it wasn’t a financial product.”
He said he had read Guardian Australia’s coverage of how much money Pattenden was able to legally make from Youpla via his companies in Vanuatu.
“Obviously, if there’s any options for clawback we want to explore those,” he said.
Pattenden has not responded to previous detailed questions about the matter from Guardian Australia.
Jones said that based on his experience role as a local MP advocating for victims of a superannuation collapse, opportunities to recover money from offshore operators were “pretty limited”.
Before the election Jones promised an inquiry into the causes of Youpla’s collapse. After the election the new minister for Indigenous affairs, Linda Burney, said an investigation would be top of her agenda.
But Jones told Guardian Australia this was “the easiest bit”. “I think it’s been pretty well raked over what has happened,” he said.
He said he would get an update from Asic on its investigation into the collapse next week.
