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AFCA rules funeral insurer 'deceived' 70-year-old Indigenous man

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A 70-year-old Indigenous man, who is dependent on Centrelink benefits and never really learnt to read or write, was duped into buying a funeral insurance plan from Aboriginal Community Benefit Fund (ACBF) and is entitled to a full refund for premiums he has paid, a ruling has found.

The Australian Financial Complaints Authority (AFCA) says the insurer engaged in “misleading, deceptive or unconscionable conduct” to sell the plan to a “vulnerable” person, using Aboriginal-related symbols in its materials to give the impression the product was designed for the Indigenous community.

AFCA says premiums for the plan were paid through a direct debit from Centrepay, a breach of the arrangement with the Department of Human Services.

It ruled the man, because of his limited education, is unlikely to have understood the vast amount of information and documentation that was given to him.

“The panel is satisfied the complainant would find it challenging, if not impossible, to understand the nature and effect of the obligations to which he had committed himself,” AFCA says in the dispute ruling.

“The complainant was influenced by ACBF’s use of words, colours and imagery normally associated with Aboriginal and Torres Island peoples and induced by such images to rely upon what he was told by the agents at the time he joined the plan.”

AFCA says it is satisfied the misrepresentations resulted in the complainant becoming a “member of the plan at a time when [he] was a vulnerable person”.

“The conduct amounted to targeting of an Aboriginal person for sale of its financial product whom it knew or should be taken to have understood was at special disadvantage,” AFCA says.

“Such conduct was deceptive, unconscionable and in breach of the duty to act with utmost good faith.”

AFCA ruled ACBF is to return the complainant's premiums paid in relation to the plan - at least $7369 as at December 31 2018 - plus interest calculated from January 25 2019 - the date his plan was cancelled because of non-payments - until the refund has been made.

The man, with help from his lawyer, lodged a complaint after the plan was cancelled. AFCA says it is unlikely he had any actual awareness of the loss until about the time he instructed his lawyer to act on his behalf in August 2019. He bought the policy in November 2006.

AFCA has previously ruled against ACBF in a similar complaint lodged by an Indigenous woman, who just turned 20 in 2006 when she signed up for a plan that was pitched as having ties with the community and designed to benefit Indigenous people.

The insurer, which rebranded as Youpla in 2019, was criticised during parliamentary hearings last year and also during the Hayne royal commission in 2018 for selling near-worthless funeral products to the Indigenous community.

Last year the Australian Securities and Investments Commission launched legal action against Youpla and its subsidiary ACBF Funeral Plans, accusing them of using false and misleading tactics to sell funeral covers to the Indigenous community.

Federal Court Justice Jayne Jagot has ordered the parties to participate in a mediation before a registrar by May 14 and notify by May 28 the outcome or status of the session.

Justice Jagot also listed the matter for a further case management hearing on September 24.

Click here for the AFCA ruling.