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Funeral insurer 'misled' 20-year-old Indigenous woman

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A complainant who alleged she was misled over the purchase of a funeral insurance plan from Aboriginal Community Benefit Fund has won her bid to have her premiums refunded.

The Australian Financial Complaints Authority (AFCA) ruled the insurer, which last year rebranded as Youpla, must return to the complainant $2705.71 plus interest from June 21 2017 - the date her policy was cancelled because of non-payment of premiums - until the refund is made.

Youpla was criticised during parliamentary hearings in April by MPs and also during the Hayne royal commission hearings in 2018 for selling low value funeral products to the Indigenous community. The company marketed the business as having ties with the community and that the products were designed to benefit Indigenous people.

AFCA says the evidence produced by the complainant, who is a First Nations woman and just turned 20 when she signed up for the plan, showed she was duped into buying the product in 2006.

The insurer rejected the allegations and also said AFCA has no jurisdiction over the complaint as the plan it sold to the woman was not a financial service. It also argued the complainant is time barred but AFCA disagreed as the woman first became aware of the loss no earlier than March last year.

In the complaint lodged through her lawyer, the woman said the insurer engaged in misconduct in relation to the marketing, selling and issuing of the funeral plan when two representatives approached her unsolicited.

AFCA accepts her mental state was most likely unstable and not able to deal with written material from the representatives. The woman had been experiencing homelessness and medical issues from drug and alcohol abuse during early childhood.

The complainant submitted that the insurer failed to disclose it was not an Aboriginal organisation. She also said the representatives were white although one claimed he was Aboriginal. They relied on Aboriginal imagery and provided the complainant with a pamphlet with an Aboriginal flag.

AFCA says it accepts the complainant would have been aware that she was signing a document to provide cover for her funeral.

“However, the panel finds it is fair to conclude the complainant was misled, through ACBF’s sales and marketing, into believing ACBF was an Aboriginal fund, set up for the benefit of the Aboriginal community,” AFCA ruled.

“The panel is satisfied the misrepresentations resulted in the complainant becoming a member of the fund at a time when the complainant was a vulnerable person.”

insuranceNEWS.com.au asked ACBF for a response to the AFCA ruling.

Youpla CEO Bryn Jones told the House of Representatives Standing Committee On Economics in April that the business’s application for a financial license was rejected.

The Australian Securities and Investments Commission (ASIC) declined to provide details about Youpla’s licence application, saying such information are confidential.

But an ASIC spokesman says the regulator understands Youpla has stated publicly it is not selling products at the moment and has also deactivated its website.

Click here for the ruling.