Financial Rights Legal Centre and Victorian Aboriginal Legal Service welcome findings by the Australian Financial Complaints Authority (AFCA) in two separate cases that funeral insurance provider Youpla misled Aboriginal policyholders.
AFCA has found, in two separate determinations that ACBF Funeral Plans Pty Ltd (ACBF), owned by Youpla Pty Ltd, misrepresented itself as an Aboriginal owned and controlled, not-for-profit, community organisation serving the Aboriginal and Torres Strait Islander community.
AFCA also found that it was most likely the complainants did not understand that the insurance premiums would increase with age or that the premiums paid would likely exceed the benefit payable.
AFCA’s rulings concern one case brought by Financial Rights and another case brought by Victorian Aboriginal Legal Service on behalf of Aboriginal policyholders.
Financial Rights currently has seven other cases against companies in the Youpla group pending determination while the Victorian Aboriginal Legal Service intends to file further complaints shortly.
Financial Rights Legal Centre Chief Executive Officer Karen Cox said it was a positive determination for some of Financial Right’s most vulnerable clients and encouraging for others who find themselves in similar situations.
Ms Cox said the Hayne Royal Commission revealed systemic failures on the part of funeral insurance providers including Youpla to meet community standards and expectations.
“This company, now trading as Youpla, has long exploited the Aboriginal community by posing as an Aboriginal owned company with a product meant for their specific needs,” Ms Cox said.
“Funeral insurance has always been a terrible product, especially if you entered into it at a young age. It has a high cancellation rate and leaves you nothing if it’s cancelled due to non-payment at any stage, regardless of how much has already been paid,” Ms Cox said.
“It is particularly bad for disadvantaged and vulnerable people who are already struggling with finances. The amount paid into these products is rarely worth it.
“Every individual’s circumstances are unique. It’s important that anyone with concerns about a funeral insurer or service contact the Financial Rights Legal Centre or seek other independent legal advice.”
Victorian Aboriginal Legal Service Chief Executive Officer Nerita Waight said VALS is pleased to confirm the determination of the AFCA to award compensation, noting that while immense progress has been achieved since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, clearly as this outcome highlights, further work is needed to facilitate the redress of the exploitation of members of the community.
Ms Waight further asserted that the outcome is particularly pleasing for the VALS client, who hopes that this outcome serves as a deterrent to those seeking to mislead members of the Aboriginal and Torres Strait Islander communities.
“These decisions again bring into stark reality the findings of the Royal Commission. The findings of the Royal commission painted a rather bleak picture regarding the treatment of many Aboriginal and Torres Strait Islander people within the financial services system,” Ms Waight said.
“Aboriginal and Torres Strait Islander people are often highly vulnerable to exploitation due to social and economic disadvantages and lower levels of financial literacy, due to the lack of financial services providers offering culturally safe financial service products.”
“Aboriginal and Torres Strait Islander people are also particularly vulnerable to poor value funeral insurance products because of the cultural importance of Sorry Business and the high costs involved.”
VALS Senior Legal Practitioner Siobhan Doyle said the determination is an important step to holding ACBF responsible for the harm they have caused the Aboriginal and Torres Strait Islander community which was highlighted in the Royal Commission.
“The Royal Commission has shown that this has resulted in many firms designing business models around the economic exploitation of Aboriginal and Torres Strait Islander people. The findings of these decision evidence that many operators continue to mislead or behave deceptively in their engagement with Aboriginal and Torres Strait Islander peoples,” Ms Doyle said.
“Aboriginal and Torres Strait Islander people are being exploited by individuals selling unsuitable financial products and are being subjected to unsolicited and high-pressure selling techniques, that are resulting in hardship.”
AFCA found that:
- ACBF misled and deceived the complainant by a combination of its product branding and sales process;
- ACBF misled and deceived the complainant to believe the plan was controlled by and sold for the benefit of the Aboriginal community;
- From the complainant’s dealings with ACBF, it was most likely the complainant did not understand that the premiums would increase with age or that the premiums paid would likely exceed the benefits payable.
Quote from AFCA determination 637663:
“The panel accepts that the complainant would not have entered into the plan on her behalf or on behalf of her children if informed ACBF was a private, non-Aboriginal organisation and the premiums would likely exceed the benefits paid.”
Quote from AFCA determination 641598:
“The panel is satisfied that a combination of the branding of the product and sales process has mislead and deceived the complainant to believe the plan was controlled by and sold for the benefit of the Aboriginal Community. The panel accepts the complainant would not otherwise have entered the Plan. Further the panel accepts ACBF failed to inform the complainant that the premiums payable on the Plan would likely exceed the benefit payable.”
Sorry Business (funerals and related cultural activities) is of special, cultural significance to Aboriginal and Torres Strait Islander communities.
Aboriginal and Torres Strait Islander communities appear to have been disproportionately harmed by funeral policies, particularly those offered by the Aboriginal Community Benefit Fund now known as Youpla.
Funeral policies are often of limited value. Payout amounts are often small and there are high rates of cancellations.
Youpla is a private company, it historically was not Aboriginal owned or managed. For decades Youpla sold funeral insurance and funeral expenses policies marketed solely to Aboriginal and Torres Strait Islander consumers through unsolicited sales techniques in the Aboriginal and Torres Strait Islander community.
Youpla used the trading name ‘Aboriginal Community Benefit Fund’, Aboriginal sales staff and Aboriginal motifs in their marketing to appeal to Aboriginal and Torres Strait Islander consumers.
Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry’s recommendation, the Australian Government removed the regulatory loophole which enabled funeral expenses products to avoid regulation under the Corporations Act.
Since the Royal Commission, Youpla has rebranded itself and stopped selling their products. Youpla has applied for an Australian Financial Services Licence.
About Financial Rights
The Financial Rights Legal Centre is a community legal centre that specialises in helping consumers understand and enforce their financial rights, especially low income and otherwise marginalised or vulnerable consumers. We provide free and independent financial counselling, legal advice and representation to individuals about a broad range of financial issues. We operate the Insurance Law Service which provides advice nationally to consumers about insurance claims and debts to insurance companies. Financial Rights also operates the National Debt Helpline in NSW, assisting consumers experiencing financial difficulties. Financial Rights took over 25,000 calls for advice or assistance during the 2017/2018 financial year.
• National Debt Helpline 1800 007 007
• Insurance Law Service 1300 663 464
• Mob Strong Debt Help 1800 808 488
About Victorian Aboriginal Legal Service
The Victorian Aboriginal Legal Service Limited (VALS) has been fighting for the rights and justice for Aboriginal peoples since 1973. VALS plays an important role in providing referrals, advice/information, duty work or case work assistance to Aboriginal and Torres Strait Islander peoples in the State of Victoria. Solicitors at VALS specialise in one of three areas of law, being Criminal Law, Family Law and Civil Law. VALS also offers women’s transitional housing through Baggarrook and a specialist legal and litigation practice, Wirraway. VALS maintains a strong client service focus which is achieved through the role of Client Service Officers (CSOs) who act as a bridge between the legal system and the Aboriginal and Torres Strait Islander community. VALS is actively involved in community education, research and advocacy around law reform and policy development.