‘A kick in the guts’: ACBF-Youpla victims still waiting for millions in compensation

One year on from the collapse of predatory funeral insurer ACBF-Youpla - and the loss of millions of dollars in policies paid by mostly low-income Aboriginal families - consumer advocates are calling for the government to offer them a refund amid estimates the compensation bill could run to more than $300m.

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.

Kuku Yalanji elder Daphne Naden signed up to the fund in the mid-1990s for herself and her four daughters, who were young children at the time, and paid into the fund every fortnight for decades.

Naden says she and dozens of others in her community of Mossman in far north Queensland signed up after they were door-knocked by representatives of ACBF, whom she trusted because they gave the appearance of being an Aboriginal-run community organisation.

Naden has lost more than $15,000 and is worried about handing on a debt to her family.

"You struggle to get work, you struggle to make ends meet, and then struggle to bring your family up and give them opportunities," she says.

"You put aside money so that you are not forever struggling and your kids don't forever struggle, and then this happens. It's a kick in the guts."

Naden says the families of some who have died have had help from an emergency relief fund but others are waiting for news of a compensation scheme under consideration by the federal government.

"This uncertainty is stressful and there's a lot of anxiety," she says. "It's hard enough with the prices of food and every other thing going up, homelessness and other problems families are facing."

At 67, she has taken out another funeral policy because she does not want to leave her children a debt and says many other former policyholders have done the same.

"Just the thought of going to another one when I've already paid into one for a whole heap of money, that was very hard for me to do," she says.

Concerns about Youpla - previously known as the Aboriginal Community Benefit Fund (ACBF) - have been around for a very long time. The first complaint about its conduct emerged in 1992, its first year of operation.

Over the years, the corporate regulator Asic, Fair Trading NSW and the Australian Financial Complaints Authority (Afca) have all investigated and taken action against the company, but it continued to operate.

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 only when ACBF's conduct was exposed at the 2018 banking royal commission that its licence to sell new products was withdrawn. Regulators and the government were warned the company was at risk of collapse. After Asic wrote to the directors in March last year, questioning the company's solvency, the company's directors finally pulled the plug.

The then minister for financial services, Jane Hume, said the Morrison government did not intend to intervene but that those affected could apply for a state-assisted funeral, commonly known in the industry as a "pauper's" funeral.

Soon after its election, the Albanese government announced an emergency relief fund for Aboriginal families who needed urgent assistance with funerals. The scheme is open until 30 November. So far, 160 applications have been approved. The program has paid out $1.35m to 149 recipients to help families bury their loved ones, according to a treasury spokesperson.

"The collapse of the Youpla funeral fund has had a massive emotional and financial impact on many First Nations people," the Indigenous Australians minister, Linda Burney, says.

"We are working hard on a longer term resolution to assist the other Aboriginal and Torres Strait Islander Australians who were affected by Youpla's collapse."

Consumer advocates say the resolution must include the option of a refund.

The Save Sorry Business coalition says 83% of clients they surveyed want their money back. The coalition calculates that there are an estimated 30,000 current and former policyholders with total losses in the vicinity of $300m.

"When a product fails, Australia offers as part of our consumer laws the right for replacement or refund," says Save Sorry Business' Bettina Cooper, a financial counsellor. "If First Nations people harmed by the collapse of Youpla are not given the option of money back then that goes against the principles well established within consumer laws."

Cooper says previous federal governments legitimised the company by authorising millions in automatic payments from welfare income via the Centrepay system.

Centrepay was established so people could set up automatic payments for essentials such as rent or food from their fortnightly welfare income. Cooper says ACBF-Youpla was the only funeral fund granted access to Centrepay, and this gave it the appearance of having the government's tick of approval.

She says refunds should be on the table, alongside the option of like-for-like products. Over the past 12 months, some people have already invested in other insurance products and funeral bonds.

"To not provide money back as an option means that those people will be harmed," she says. "I mean, what does somebody do with two funerals?"

Daphne Naden believes the directors of the company and its founder, Ron Pattenden, who is believed to be in Vanuatu, need to be held responsible.

"When you go out to community, that's what people always ask - about him. What's going to happen to him? When is he going to be held accountable?"

A 2022 Guardian Australia investigation revealed that Pattenden collected more than $20m in tax-free income from the business through a complex web of offshore companies, over 10 years from 2010, and continued to make money from it even after he sold it to new operators.

Asic is investigating whether former directors have breached the law.

In December, the federal court froze the assets of another former director, Bryn Jones. The matter will be back in court in May.

After a year of uncertainty, Cooper says people are desperate to hear some hopeful news.

"The government needs to tell people what is happening, and the steps that they're taking towards an enduring resolution, so that First Nations people are not stressed or concerned but have a clear understanding of decisions being made on their behalf."