The Albanese government has announced a $97m fund to support thousands of mostly low-income Aboriginal families who were left with nothing after the collapse of predatory insurance provider ACBF-Youpla in 2022.
The Youpla support program will begin on 1 July this year and run for two years.
ACBF-Youpla collapsed in March 2022, leaving more than 13,000 Aboriginal people, some of them elderly and in palliative care, without the means to pay for funerals. Families had to resort to crowdfunding and some were forced to leave their loved ones’ bodies in the morgue while they raised the funds.
The minister for Indigenous Australians, Linda Burney, said the new measures will hopefully bring “peace of mind” to thousands of vulnerable people.
“This is an acknowledgment by the Albanese government that this was just shocking practice,” Burney said. “And I can tell you, it didn’t really matter where I went in the country, particularly Queensland and New South Wales, people raised this issue with me with very, very deep concern. It was so widespread.”
Eligible recipients will have the choice of a funeral bond or a cash payment worth 60% of the value of their policy. Financial counselling will be offered to help them better understand their options.
“So it really is about what people want to do, how they would like to go forward,” Burney said. “It’s not the government that will make those decisions, it will be the people who had the premiums.”
ACBF-Youpla targeted Indigenous people using marketing materials in the distinctive red, black and yellow colours of the Aboriginal flag, including stuffed toys and colouring books for children, turning up to community events and by conducting door-to-door sales.
It was investigated by various regulators over the years but it was not until 2018, when its conduct was exposed in the banking royal commission, that its licence to sell new products was withdrawn.
Regulators and the government were warned the company was then at risk of collapse. In 2021, after the Australian Securities and Investments Commission (Asic) questioned its solvency, the company’s directors finally pulled the plug.
The then Coalition minister for financial services, Jane Hume, said the Morrison government did not intend to intervene and those affected could apply for a state-assisted funeral, commonly known in the industry as a “pauper’s funeral”.
After the 2022 election, Burney and the financial services minister, Stephen Jones, announced an interim fund for families to pay for funerals, while an enduring solution was worked out.
The Save Sorry Business Coalition – community financial advisers who have advocated for thousands of affected policyholders – said the final scheme was “a fair outcome”.
“Under the previous federal government, the answer that we were going to get was ‘nothing’,” campaign coordinator Bettina Cooper said. “Under this government we got a interim solution, which allowed us to let people be buried with dignity. And they made a promise to design an enduring resolution and they’ve kept that promise.”
The scheme will be open to anyone with an active policy at 1 August 2015, which was when the federal government took ACBF-Youpla off its Centrepay system.
Centrepay allowed people to have their bills automatically deducted from their income support payment. The service was generally reserved for essentials such as rent and electricity but ACBF-Youpla was allowed to join and collected about $169m in payments before it was finally removed in 2017.
In 2022 Guardian Australia revealed that the founder of the company, Ron Pattenden, collected more than $20m in tax-free income from the business through a complex web of offshore companies and continued to make money from it even after he sold it to new operators.
In August 2023 Asic commenced proceedings in federal court against five former directors and officers for breaches of their duties.
“Asic’s case seeks to hold to account those involved in the alleged governance failures and director misconduct that impacted the First Nations people who were members of the Funds,” the Asic deputy chair, Sarah Court, said.
Asic alleges the directors and officers maintained insurance arrangements with Crown Insurance, a Vanuatu-based company owned and controlled by Pattenden and another director, Johnathan Law, and did not act in the best interest of the ACBF entities and members.
Breaches of directors’ duties can attract a maximum penalty of $200,000 for each breach that occurred between 2017 and March 2019.
The case will return to court in April 2024.
