A funeral insurer misrepresented to Indigenous consumers that the business was owned or managed by Aboriginal people, the Full Federal Court has ruled, overturning an earlier decision.

The court says the primary judge, Justice Scott Goodman, erred in dismissing the allegation made by the Australian Securities and Investments Commission in its case against Youpla Group and associated entity ACBF Funeral Plans. The allegation is one of four claims of misconduct the regulator flagged from between January 2015 and November 2018.

Evidence presented to the primary judge was sufficient to establish the falsity of the representation, the court said in a ruling yesterday. The ruling also notes that the insurer admitted in its amended defence that the business was not owned or managed by Aboriginal people.

The primary judge also failed to consider the relevance of the introduction in September 2018 of a disclaimer from the insurer that included the phrase “we are not an Aboriginal company”.

“In our view the new disclaimer is an admission that, as at September 2018, ACBF did not have Aboriginal ownership or management. It is therefore an admission of the falsity of the representation, as at that time,” the court said.

“As we trust is abundantly clear … the evidence clearly establishes that the Aboriginal ownership/management representation is false. We consider that the primary judge erred in failing to so find.”

The corporate regulator’s Deputy Chair Sarah Court says the decision “provides some formal acknowledgment of that harm and will be a deterrent to anyone who tries to mislead Aboriginal consumers about whether a business is Aboriginal-owned or managed”.

The court has ordered the case return to the primary judge for determination of the appropriate penalty.

Youpla was under scrutiny for years over high-pressure sales tactics and misleading and deceptive practices used to market low-quality funeral plans to Indigenous communities.

The insurer’s business model was exposed during the 2018 Hayne royal commission and it later collapsed as its financial troubles deepened.

Click here for the ruling.