ACBF Funeral Plans made false, misleading representations selling its funeral insurance products to Indigenous customers, the Federal Court has ruled, ordering the company to pay a penalty of $1.2 million.

However, the court dismissed three other claims by the Australian Securities and Investments Commission (ASIC) in its case lodged in October 2020 against the business.

The dismissed allegations were that ACBF Funeral Plans had falsely misrepresented it was owned or managed by an Aboriginal person or persons; that the Aboriginal Community Funeral Plan (ACF Plan) had approval from the Indigenous community; and the ACF Plan was more beneficial to Aboriginal consumers than other funeral insurance products generally available at the time.

The court also did not accept that parent company Youpla Group was involved in the contravention by ACBF Funeral Plans. Youpla Group and its entities went into liquidation last year.

ASIC Deputy Chair Sarah Court said the regulator took the case to court “because of the harm we believed this business was causing to Aboriginal people”.

“Taking regulatory action where misconduct is targeted at Aboriginal and Torres Strait Islander peoples is a priority that we are committed to, and we will continue to work with stakeholders to achieve appropriate outcomes,” she said in a statement today after the court judgment yesterday.

The regulator says it is “carefully” reviewing the court decision by Justice Scott Goodman.

The judgment says the Youpla subsidiary made misleading payout representations about the ACF Plan product between January 2015 and November 2018.

ACBF Funeral Plans represented to policyholders that they would receive a lump sum payment of their chosen benefit amount, when in fact they would only be reimbursed for funeral-related expenses up to the benefit amount upon production of proof that those expenses had been incurred.

“That such a representation was made is readily apparent from the admissions concerning the marketing material, the point of sale documentation and certificates described…and is confirmed by the documents tendered by ASIC,” the judgment says.

“Further, there is some evidence before the Court (in the form of a spreadsheet) that during the relevant period, a number of claims were paid in sums less than the chosen benefit amount.”

The judgment also addressed ACBF’s ability to pay the penalty since it has gone into liquidation.

“The fact that ACBF is in liquidation is not of itself an impediment to the making of a pecuniary penalty order,” the judgment says.

“The present is a case in which it is appropriate to impose a penalty, notwithstanding that it will likely not be paid as ACBF is in liquidation, for the purpose of deterring others minded to engage in similar contraventions.”

Click here for the court ruling.