Collapsed funeral fund misrepresented itself as Aboriginal owned or managed, court finds
A collapsed funeral fund misrepresented itself as Aboriginal owned or managed when that was not the case, according to a full court decision handed down on Thursday.
The Youpla Group schemes, formerly known as the Aboriginal Community Benefit Fund (ACBF), failed in 2022, leaving thousands of mainly low-income families unable to pay for funerals.
Customers who bought the plans paid fortnightly premiums so that their family members would be covered for funeral expenses, according to the Australian Securities and Investments Commission (Asic), which pursued the case.
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A judge previously imposed a $1.2m penalty on ACBF for wrongly telling plan holders that they would receive a lump sum payment of their chosen benefit amount. The court found last year that the scheme was only ever designed to reimburse funeral-related expenses up to the benefit amount and upon production of proof that those expenses had been incurred.
The decision of the full court on Thursday was triggered by an Asic appeal. The judgment means ACBF was also found to have misrepresented to Aboriginal consumers that it was Aboriginal owned or managed.
The trial judge will now consider an appropriate penalty.
The Asic deputy chair, Sarah Court, said on Thursday the regulator took the case because of the harm caused to Aboriginal families.
“Today’s decision provides some formal acknowledgment of that harm and will be a deterrent to anyone who tries to mislead Aboriginal consumers about whether a business is Aboriginal owned or managed,” Court said.
The federal government has set up a financial support program for the thousands of people affected by the collapse of the scheme.
The funeral insurance scheme used marketing materials in the distinctive red, black and yellow colours of the Aboriginal flag, and were active at community events and conducted door-todoor sales.
The corporate regulator has also started civil proceedings against five former directors and officers of ACBF and Youpla, alleging breaches of their duties.
Those proceedings are chiefly concerned with the scheme’s alleged use of an offshore insurer, the Vanuatu-based Crown, which Asic said was controlled by two of its directors.
Asic is arguing that the size of the Crown policies weighed on the funeral scheme’s financial position. It also alleges that by continuing to insure with Crown, there was a risk that the funeral scheme would be left with insufficient reserves to meet ongoing liabilities to pay death benefits to members.