The Federal Court has thrown out a request by the Australian Securities and Investments Commission (ASIC) to order two Aboriginal life insurers to repay some of its customers. ASIC tried to obtain an order for the Aboriginal Community Benefit Fund and Aboriginal Community Benefit Fund No 2 to repay policyholders who claimed a refund following a Federal Court ruling in March.

ASIC also asked for an independent claims reviewer to determine any disputed claims.

In March the court ruled that the companies acted illegally in offering memberships. Most policies were sold door-to-door, contravening the anti-hawking provision of the Corporations Act. Both companies were ordered to stop selling policies in this way.

ASIC’s requests were rejected because the Corporations Act did not authorise such orders. The court said appointing an independent auditor would be unconstitutional, and it had concerns about making an order that could affect the other fund members.

Greg Kirk, ASIC Director Compliance Campaigns and Consumer Protection, told Sunrise Exchange News the decision is not what the regulator wanted but it understands that the court has to look out for consumers who are still fund members.

“We had a preference to get a remedy for consumers affected by the funds’ actions, but we’re confident the situation won’t have a negative flow-on effect for current customers.”