Asic seeks record $7.5m penalty against ACBF-Youpla for alleged deceptive and misleading conduct
The corporate regulator Asic is seeking a record and “very severe” penalty of $7.5m against the predatory funeral insurer ACBF-Youpla for its “deliberate and knowing conduct of preying on vulnerable Aboriginal people” over years of operation.
Asic alleges the company engaged in deceptive and misleading conduct between 2015 and 2018. It is seeking a penalty of $6m against ACBF, and $1.5m against its later iteration, Youpla, for making false representations that it was an Aboriginal-owned trust, and that the products it offered were of greater benefit to customers than other products available.
If awarded, it will be the highest ever penalty against a company for deceptive and misleading conduct.
The previous record was set against the now-defunct Birubi Art, which was fined a record $2.3m in 2019 for false and misleading conduct for selling fake Aboriginal art that had been made in Indonesia.
In the federal court on Tuesday, Asic’s lawyers argued that Birubi was “a minnow” compared with the direct harm done to consumers by ACBFYoupla.
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ACBF-Youpla collapsed earlier this year, leaving thousands of mostly lowincome Aboriginal people, some of them elderly and in palliative care, without any means of paying for a funeral. People had paid between $3,000 and $30,000 into the fund during its time of operation, from 1992 to 2022. Efforts to claw back funds are ongoing but it is unclear those affected will ever receive a refund.
In September, the federal government set up an interim scheme to provide urgent relief for families, amid reports that people were forced to leave their loved ones in the morgue while they raised money to cover the cost of funerals. The scheme is open until 30 November 2023.
In the federal court on Tuesday, Asic senior counsel David Batt said the $7.5m penalty sought was “very, very significant” because the conduct was at a senior level over a long period of time, and because its former directors showed a “deliberate and callous intent” to deceive customers.
It was “deceitful conduct going to the heart of the relationship the company had with its customers,” Batt SC told Judge Goodman of the federal court.
Asic is continuing to investigate the conduct of current and former directors of the funeral fund,including the founder, Ron Pattenden, who is believed to be in Vanuatu.
ACBF-Youpla targeted Indigenous people by using marketing materials in the distinctive red, black and yellow colours of the Aboriginal flag; offering stuffed toys and colouring books to children; and by going door-to-door and attending Aboriginal community events such as the Koori rugby league knockout.
Batt SC told the court that Asic investigations had found that Ron Pattenden and his offshore entities were deriving $800,000 to $1m every year from the business between 2015 and 2018.
He said dividends paid to directors and monies paid to ACBF administration were greater than the amounts it paid to customers.
The business made $3.4m in profits in one year, he told the court. Another year its profits were around $4m. The company paid out “a fraction” of that income in funeral policies, estimated to be around 16% to 20% of its takings.
“This is highly unsatisfactory conduct that warrants a very substantial penalty despite the liquidation,” he said.