As ASIC cracked down on insurance company, it accessed millions in social benefits

Euahlayi woman Beverley Roberts is one of thousands of First Nations Australians who for years have put money aside to pay for their own funerals.

“I lost my father, my brother, my sister and my nephew in the space of 12 months, and we struggled to bury them,” Ms Roberts said.

“That’s why I was so happy when they came in and said they were an aboriginal funeral fund.”

Ms Roberts said she was the first person from Dubbo to register with the funeral insurer, the Aboriginal Community Benefit Fund (ACBF), in the mid-1990s.

But rather than transfer the money from his savings account to pay his premiums, the ACBF vendor gave him the option of taking the amount directly from his Centrelink payments.

“When they were going around all our houses just to sign us up, they had the Centrelink forms for them to take a direct debit from our Centrelink salary,” Ms Roberts said.

She estimates she paid over $60,000 for policies for herself and her family.

“I just thought it was a good thing for Native people, because we struggle all the time to bury our loved ones. »

From 2001 to 2017, ACBF was the only funeral fund to use the government’s Centrepay system to debit millions of dollars from Centrelink payments.

Now ACBF – also known as Youpla – has collapsed, leaving thousands of clients like Ms Roberts without funeral cover.

Aaron Davis of the Indigenous Consumer Assistance Network (ICAN) said ACBF’s access to Services Australia’s Centrepay system has allowed the business to take off in remote communities.

“The fact that ACBF has been on the Centrepay system for so long has allowed the business to grow and grow and grow and prosper to the point where we estimate Indigenous Peoples have lost over $200 million .

The Australian Securities and Investments Commission will tell the Federal Court today whether it intends to pursue a deceptive and misleading conduct case it brought against the company in 2020, for its conduct between 2015 and 2018.

Questions are also being raised about how the company was able to use the Centrepay system for years, even after two reports warned of a possible lack of consumer protection.

Proponents say it’s time for the government to take responsibility for the disaster.

ACBF allowed to ‘thrive’ on Centrepay

Ms Roberts says she paid thousands of dollars to the ACBF before finding out it was not Indigenous owned or operated.

“I was the first to sign up here in Dubbo, then after that, [the salesman] asked me where all the other aboriginals lived in that area, and I pointed them all in the right direction, and he listed everyone,” she said.

In 2008, ACBF paid for her husband’s funeral when he passed away.

Ms Roberts then enrolled her grandchildren and was paying $87 per fortnight for eight ACBF policies.

Initially, she did not believe that the Youpla group was in financial difficulty.

“And then all of a sudden I kept seeing [other people] on Facebook saying ‘stop payments immediately, stop payments immediately.'”

The government has issued warnings

Over the years there have been no shortage of warnings that the company may not be a suitable candidate for Centrepay.

Centrepay was created in the 1990s as a financial management tool, allowing welfare recipients to have essential expenses like rent and energy bills deducted from Centrelink payments before the money ran out. reaches their bank accounts.

When ACBF joined ACBF in 2001, it had recently been the subject of legal action by regulator ASIC for misleading and deceptive conduct.

In 2003, he faced another ASIC challenge, for violating federal anti-peddling laws.

ICAN’s Mr. Davis first raised concerns about the company’s use of Centrepay in 2007.

In 2013, an independent review of Centrepay warned the government of the risk involved in allowing a funeral insurance company access to the scheme.

“It is possible that suppliers will go into receivership or go bankrupt, with customers subsequently receiving no benefit for the money spent for many years,” report author Anna Buduls wrote in 2013.

In the 2011/12 financial year alone, it reported that 9,500 customers made payments into a funeral benefit plan through Centrelink, amounting to $6.6 million.

“Anecdotally, Indigenous clients are the primary users of this deduction category, largely due to their cultural practices of deep reverence and respect in matters of death and bereavement,” she said. writing.

Ms Buduls wrote that stakeholders and regulators were concerned that funeral fund customers would not fully understand what they were buying and would lose their contributions if they missed a single payment.

The report also noted the ministry’s unwillingness to investigate when companies using Centrepay were accused of doing the wrong thing.

Six thousand missing customers

Youpla’s current manager, Greg Wheeldon, said he saw no reason why the company couldn’t access Centrepay.

“I would have thought at the time that this would have been a sensible thing because it would force policyholders to meet their monthly payments, whereas if they had to make voluntary payments every month, it would have been the last thing on their list to pay,” he said.

“To my knowledge, they could have canceled the Centrepay leadership at any time if they wished, but that would mean they would lose their policy, so they would have to make a decision on that.”

The government changed rules so the funeral home provider could no longer access Centrepay in 2015, but legal challenges forced it to continue using the system until February 2017.

Ms Roberts changed her policy to a direct bank transfer when this happened.

But another 6,000 policyholders could not be contacted by the company and subsequently lost their cover and all the money they had contributed.

Supporters want efforts to find these people and include them in a government-established compensation fund.

Appearing before the Royal Banking Commission in 2018, then-CEO Bryn Jones was asked how the company managed to lose track of so many customers.

Rowena Orr, QC: Didn’t find them?

Bryn Jones: No.

Ms Orr: Even if you had deducted amounts from their Centrelink benefits?

Mr. Jones: Yes.

The ABC contacted Services Australia to ask a series of detailed questions, including the amount paid to ACBF through the Centrepay system.

Services Australia said it does not have the resources to extract the data.

He said appropriate action had been taken against the company.

“On July 1, 2015, Centrepay’s policy changed and funeral insurance was then excluded from Centrepay,” he said.

“Consistent with this change in Centrepay policy, the Indigenous Community Benefits Fund has been removed as a Centrepay business.”

The new federal government has pledged to investigate ACBF/Youpla, but has not yet given a timeline.