Under-fire Youpla Group and its subsidiaries may have more trouble ahead for using allegedly misleading tactics to sell near-worthless funeral insurance policies to the Indigenous community.

The Australian Securities and Investments Commission (ASIC) announced last week it has taken legal action in the Federal Court against the business, which is accusing it of making false marketing presentations to Aboriginal customers who bought the products thinking it was designed to benefit the community.

In a separate statement a day after the ASIC action was announced, the Financial Rights Legal Centre says it currently has seven other cases pending determination against Youpla at the Australian Financial Complaints Authority (AFCA).

The centre says the Victorian Aboriginal Legal Service intends to file more complaints shortly against Gold Coast-based Youpla.

AFCA has already ruled against Youpla in two separate cases that were launched by the centre and the Victorian Aboriginal Legal Service.

“Funeral insurance has always been a terrible product, especially if you entered into it at a young age,” the centre’s CEO Karen Cox said. “It has a high cancellation rate and leaves you nothing if it’s been cancelled due to non-payment at any stage, regardless of how much has already been paid.”

ASIC’s legal action alleges Youpla made misrepresentations in its marketing materials to create the perception that its product was owned or managed by Aboriginals.

The alleged misconduct took place between January 2015 and November 2018.

The corporate regulator says Youpla, which until last year was known as the Aboriginal Community Benefit Fund, promoted and sold a funeral expenses insurance policy primarily to Aboriginal consumers.

The plan was marketed as providing more benefits to Indigenous consumers than rival products and would-be buyers were told the cover had the approval of the Aboriginal community, ASIC says.

The regulator is seeking declarations, injunctions to prevent further contraventions, civil penalties and adverse publicity orders.

The Consumer Action Law Centre’s Koori Engagement Manager, Kaylee Anderson, has welcomed the action taken by ASIC.

“It's great that ASIC is now taking this action to ensure there is accountability for wrongdoing and harm,” she told insuranceNEWS.com.au. “What we want to see now are arrangements for people to be fairly compensated."