Consumer groups have written to the corporate regulator, asking it to mount a full investigation into whether civil or criminal action can be pursued against people involved in Youpla, a funeral insurance group that has collapsed leaving at least 13,000 Indigenous people without coverage.
In a letter to the chair of the Australian Securities and Investments Commission, Joe Longo, the groups also ask that the regulator continue a court case against Youpla, alleging it engaged in misleading and deceptive conduct, even though the group has collapsed.
People left without the means to pay for funerals needed immediate compensation, the groups told the regulator.
Youpla, formerly known as Aboriginal Community Benefit Fund, collapsed in March, leaving the bodies of people who had paid into the scheme sitting in morgues because family members were unable to pay for funerals.
While the previous government was content to leave investigation of Youpla to Asic, and suggested families left without coverage could apply for a pauper’s funeral, the new minister for Indigenous affairs, Linda Burney, has promised that looking into the collapse was one of her highest priorities and said a resolution needed to be found.
Last Thursday, the Consumer Action Law Centre’s chief executive, Gerard Brody, wrote to Longo on behalf of groups including Choice, Financial Counselling Australia and Mob Strong Debt Help, which are members of the Save Sorry Business coalition.
Asic is already investigating the former directors of Youpla, but Brody said it should also look into “former officeholders and other controllers of the company, as we understand that there may have been people acting ‘behind the scenes’”, as well as auditors of the funds run by Youpla, who produced reports for its regulator, Fair Trading NSW.
The group was previously owned and run by Ron Pattenden, who Guardian Australia revealed last week was legally able to derive more than $20m from its operation tax-free over a period of 10 years.
Brody said the regulator should also investigate whether there was insurance coverage held by the officeholders and auditors that could be drawn on.
“The range of other actions that could be taken [include] disqualifying directors and officeholders from being involved in a company in the future,” he said.
“Should any investigation determine that there has been misappropriation of funds, then we believe that consideration should be given to whether the proceeds or benefits arising from offences can be disgorged for the benefit of affected policyholders.”
However, he said that any legal proceedings should not delay compensation to policyholders.
“Policyholders are in immediate need and should not have to wait for the finalisation of any proceedings to receive any money,” he said.
Because Youpla was now in liquidation, Asic needs permission from the federal court to continue legal action in which the regulator alleges the company misled and deceived potential customers through behaviour that included holding itself out as Aboriginal-owned and operated.
Brody said there were ways of continuing the case without burdening policyholders.
“As noted above, for many First Nations policyholders, it feels like the law has failed them,” he said.
“For this reason and to promote accountability and justice, we consider that Asic should particularly prioritise efforts to ensure deterrence to send a signal to the marketplace and the broader community that it is simply not acceptable to exploit First Nations consumers in this way.”
The case returns to court on 16 June.
“Asic will advise the court at this time whether it will continue with the proceeding and will take into account the views of the community representatives in reaching a decision,” a spokesperson for the regulator said.
The spokesperson said Asic’s existing investigation into Youpla “includes the current and former directors”.
“It is not necessarily confined to them, but Asic will not discuss the progress or focus of any investigation it undertakes.
“Any decision regarding compensation by government is a matter for the relevant government.”
