Labor pledges $4m for Aboriginal families affected by Youpla funeral fund collapse

Under the federal government scheme, to be announced by Indigenous affairs minister Linda Burney and financial services minister Stephen Jones on Monday, people who held policies with ACBF-Youpla as of 1 April 2020 will receive a payout for funeral expenses equal to the one they were originally promised by the company.

The scheme is an interim measure designed to provide urgent relief for families that need to pay for funerals now. Guardian Australia revealed in June that at least 31 families have been left without the means of paying for funerals, or had to leave their loved ones in the morgue while they raised the funds, after the company collapsed in March, taking with it all they had paid into the fund.

It comes as the Australian Securities and Investments Commission is intensifying an investigation into the conduct of current and former directors of the funeral fund, including founder Ron Pattenden, who is now believed to be in tax haven Vanuatu. Asic is also pushing ahead with a lawsuit accusing the company of misleading clients.

The interim scheme will be open until 30 November 2023 and provide urgent relief for about 500 Indigenous families while the government considers a permanent solution.

Details of how payments are to be made, and how soon the money can flow, are still to be worked out, but it is believed the government will use either or both the National Indigenous Australians Agency and the Australian Taxation Office to reimburse families.

Families will be able to register on the Treasury website.

The cut-off date of 1 April 2020 was chosen because that is the date from which ACBF-Youpla was legally prevented from taking on new members.

Jones and Burney said the government would consult widely on further steps.

The collapse has left thousands of mostly low-income Aboriginal people, some of them elderly and in palliative care, without coverage. People had paid between $3,000 and $30,000 into the fund during its time of operation, from 1992 to 2022.

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, and by conducting door-to-door sales.

At its peak, ACBF-Youpla had about 25,000 members. In some communities, about 30% of people, including children and babies, had been signed up to the fund. The worst affected was the north Queensland town of Yarrabah, where 786 people have been left facing the loss of everything they had paid into the fund.

The collapse has also left at least 31 families without the money needed to bury loved ones. The Save Sorry Business Coalition of consumer groups, representing thousands of affected policyholders, estimates that those 31 families are owed $236,089 in unpaid funeral entitlements, amid reports that families are crowdfunding and collecting cans to pay for burials.

The announcement of the interim scheme comes as Asic is pursuing action over ACBF-Youpla on two fronts: an investigation into potential breaches by directors and former directors, and legal action against the company alleging misleading and deceptive conduct in the way it sold its products.

The investigation is believed to be a high priority within the regulator.

Locals have reported seeing Pattenden in Port Vila, the capital of Vanuatu, where Guardian Australia last week located his luxury yacht, the Dream Catcher.

The separate legal action by Asic against ACBF-Youpla, alleging misleading and deceptive conduct, is continuing after federal court judge Jayne Jagot last week gave permission for it to go ahead.

Asic needed court permission because the group is in liquidation.