Linda Burney will make an investigation into the predatory funeral fund ACBF-Youpla one of her “highest priorities” on taking over as Indigenous affairs minister after Guardian Australia revealed new details of its collapse, which left more than 13,000 people facing the probable loss of everything they had paid into the fund.
“I assure people that this is the top of my agenda, probably the first thing that needs to be resolved, and I will do that carefully,” Burney told Guardian Australia.
“I understand that for some families, the pain they’re in, and the fact that they thought they would be able to bury their loved ones in comfort, and now find that their loved ones are still in the morgue after a very long time, is unacceptable.”
Youpla, previously known as the Aboriginal Community Benefit Fund, was a Gold Coast-based private business that allegedly aggressively sold funeral insurance almost exclusively to Aboriginal people, including children and babies, for decades.
Member contributions to the three funds at the time it collapsed totaled $39.2m. The liquidator said there was now just $11.9m left, and whether any contributors would see a refund remained unclear.
Before the election, Labor promised it would hold an inquiry into the operation of the business and explore whether the government had a role in assisting the thousands of affected families.
Burney said she would immediately begin looking at options for a government response.
What is ACBF/Youpla?
What is ACBF/Youpla
The Aboriginal Community Benefit Fund (ACBF) was a Gold Coast-based private business that for decades aggressively sold funeral insurance almost exclusively to Aboriginal people, including children and babies its peak, ACBF had about 25,000 clients. Trading as Youpla, it had 13,000 clients at the time of liquidation, all of whom faced losing the money they paid in contributions of active members to the three funds, totaling $39.2m. The liquidator, SV Partners, says there is just $11.9m left – the largest fund (Fund 3) has just $207,000 ACBF-Youpla was investigated by NSW’s Department of Fair Trading in 1992 and by the financial services regulator, ASIC, in 1999, 2004 and 2014, but the business was allowed to continue company became a case study at the royal banking commission in 2018Changes implemented following the royal commission led to Youpla being unable to sell to new customers without a licensed financial ombudsperson, Afca, has received 700 complaints about Youpla group since 2018, and issued 178 decisions to date, all in favor of complainants citing misleading or deceptive conduct Afca estimates it has awarded more than $1.4m in compensation, but 61 determinations remained unpaid, worth around $500,000
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“I don’t know what the resolution is precisely, but there has to be one found,” she said.
In 2019, Burney and then shadow assistant treasurer Stephen Jones wrote to the Morrison government to warn that vulnerable clients would be “ripped off twice” if ACBF-Youpla became insolvent.
“I also raised this directly with the ex-treasurer, ex-member of parliament, Josh Frydenberg, when things were going belly-up, and have not ever received a response or an invitation to have that discussion,” Burney said.
“Now it’s happened, and thousands of families are disenfranchised; there needs to be a resolution found.
“An investigation is warranted as one of my highest priorities,” she said.
‘They want justice.’
On Tuesday, Guardian Australia revealed that the founder and former director of the company, Ron Pattenden, had received more than $20m in tax-free income from the business through a complex web of offshore companies in the decade since 2010. The payments were made up of dividends due to him as a shareholder and the costs of premiums for insurance to one of his Vanuatu companies. After he sold the business to new operators in late 2018, he continued to receive money as well installments on the purchase price.
Pattenden has amassed significant wealth, including a luxury yacht and New Zealand and Vanuatu properties.
The former liquidator of one of Youpla’s funds, Roland Robson, raised concerns in a late 2021 report to creditors filed with the corporate regulator that Pattenden may have misappropriated money from it.
“My inquiries with the current directors of the company revealed that the former director of the company [Pattenden] may have misappropriated a large number of the company’s funds by way of the dividend payment to himself or related entities over several years,” Robson said in a report into the affairs of Youpla’s Fund No 2, which collapsed in December. The allegation is in a section of the report examining whether certain payments made by the company can be clawed back to pay creditors.
Pattenden did not respond to detailed questions about the issues raised in this report, and it is unknown if he disputes the allegation.
The Australian Securities and Investments Commission declined to respond in detail to Guardian Australia’s report.
“Asic is indeed investigating the performance and conduct of past and current directors of ACBF/Youpla,” a spokesperson said.
“And as such, by ASIC’s general policy, we would prefer not to comment further.”
The Greens have called for the new government to immediately commit to underwriting all funerals – particularly those of families now having to crowdfund to raise money for funeral services.
The Save Sorry Business coalition, representing more than 100 community and legal organizations supporting the thousands of affected families, said a compensation scheme is urgently required so that the funerals of loved ones can go ahead.
“This has been happening for a long time,” said Samantha Rudolph, the Aboriginal policy officer at the Consumer Action Law Centre, which is part of the coalition.
“We’re kind of just at the point where we need urgent compensation for people.”
She said Asic should continue its investigation of Youpla’s former directors because community members want justice.
“They’ve heard about the directors having a lot of money now, coming out tax-free,” she said.
“They are also very angry because they’re the ones who paid all this money and are now sitting in morgues, unfortunately.”
The coalition is also calling on Asic to proceed with legal action against Youpla, which is due back in court on 16 June, despite the company’s collapse.
“We’re going based on what the community wants, and so not only do they want compensation, but justice for what’s happening,” she said.
Asic launched the federal court lawsuit in October 2020, accusing Youpla of misleading and deceptive conduct towards potential customers.
The company’s marketing material was misleading and deceptive because it said the group was run by Aboriginal people, approved by the Aboriginal community, better than other funeral insurance products on sale, and told plan holders they would get a lump sum payout when they would only get reimbursed for funeral expenses.
Youpla denied the allegations, and the case was moving towards a trial, but progress stalled after the group collapsed into administration on 11 March.