Aboriginal people who paid into a funeral scheme that the ombudsman has ordered to repay customers, after finding it mislead and deceived them, face losing any chance of a refund now the scheme has gone into administration.
Advocates for dozens of families affected by the collapse of Aboriginal Community Benefit Fund No. 2 are now appealing to the federal government to step in and help ensure they are not left out of pocket.
However, they are not covered by a federal government proposal for a compensation scheme of last resort that is still on the drawing board, despite it being a key recommendation of the banking royal commission.
Directors of Fund 2 put it into administration in late November.
Administrators for the fund said they were facing a "a huge issue" working out what it owed to members based on the paperwork they had seen, and it is unclear whether the fund has the assets needed to cover its debts.
Mob Strong, a financial advocacy service for Aboriginal people, said it is liaising with the administrators to ensure the rights of consumers were protected.
"We implore ACBF's administrators to ensure Aboriginal and Torres Strait Islander people are paid the refunds they are owed in full," Mob Strong lawyer Mark Holden said.
"I am very disappointed that our clients who were waiting for a payment before Christmas have been denied that."
Mob Strong was also seeking clarity on the future of two other funds managed by the same company: the Aboriginal Community Benefit Fund (known as Fund 1) and ACBF Funeral Plans Pty Ltd (trading as Aboriginal Community Funeral Plan). Those funds are not in administration.
The funds are run by Aboriginal Community Benefit Fund (ACBF), a Gold Coast-based private business that for decades has sold funeral insurance almost exclusively to Aboriginal people.
At its peak ACBF had about 25,000 clients, predominantly Aboriginal and Torres Strait Islander people. Now owned by Youpla, it still has 13,000 clients.
Chief of the Financial Rights Legal Centre, Karen Cox, who represented 11 complainants, said she hoped the federal government would step in to ensure policyholders in Fund 2 were compensated, if they did not receive what they were owed in full as part of the administration process.
"Anyone who was misled into joining Fund 2 and finds themselves out of pocket as a result of the administration ought to be included in any compensation scheme of last resort,"Cox said.
Company documents show that Fund 2's directors, Greg Wheeldon and John Allen, appointed administrator W Roland Robson of Queensland insolvency firm Robson Cotteron on 24 November. Wheeldon and Allen did not become directors of the company until after the misconduct alleged in complaints to Afca and before the Royal Commission occurred.
In dozens of cases the ombudsman, the Australian Financial Complaints Authority (Afca), has previously found that ACBF misrepresented itself as an Aboriginal owned and controlled, not-for-profit, community organisation serving the Aboriginal and Torres Strait Islander community.
ACBF was also found to have sold vulnerable Aboriginal people low-value funeral insurance, including cover for children and babies, with people allegedly paying more over time than the policies were worth.
The Royal Commission into Banking in 2018 heard evidence ACBF would deduct money from Centrelink payments before people received them - which was then legal but is now illegal - and, until a policy change in 2017, deny payouts for suicide.
Afca has been scathing about the company's conduct.
"The ACBF acronym is for Aboriginal Community Benefit Fund. The words themselves evoke an Aboriginal community, a benefit for that community and [that] the benefit is supported by a fund," it said in one decision.
"ACBF‟s conduct was misleading, deceptive and unconscionable. ACBF breached its duty to act with utmost good faith and the standard of conduct required by section 12DA of the Australian Securities and Investments Commission Act 2001 (ASIC Act)."
Minutes of a meeting of creditors held on 6 December show that Fund 2's administrator W Roland Robson, of Queensland insolvency firm Robson Cotter, told the meeting that ACBF's former owner, Ron Pattenden, had previously advised he would personally and financially assist the company with outstanding claims made against it to Afca. Pattendon sold the company in 2018.
"However such offer was subsequently withdrawn which contributed to the current directors decision to place the company into the voluntary administration," he said.
Wheeldon and Allen did not become directors of the company until after the misconduct alleged in complaints to Afca occurred.
Robson told Guardian Australia he was still investigating the alleged offer by Pattenden to financially assist with the Afca complaints.
"We're still trying to get to the bottom of that," he said.
He said he estimated he had so far received more than 100 claims to be owed money from ABCF clients, many of whom had won Afca determinations against the group.
But whether the company has any assets it can draw upon to pay the determinations is unclear.
In a report on the company's affairs filed with the corporate regulator, Wheeldon said the company had no assets of its own but held a total of $56,000 on trust for other people in two Commonwealth bank accounts.
Robson declined to say if this was money that belongs to fund members but said he was investigating the financial position of the fund.
"At the moment, we're reading actuarial reports which realistically would probably turn your head inside out if you could even understand them half the time," he said.
He said he had "a huge issue" in working out what Fund 2 owed to members because Youpla ran three funds and many of the determinations made against Fund 2 by the Australian Financial Conduct Authority were "made against two or three funds at the same time".
"So I don't know what relates to Fund No. 2, which is the company I'm involved in, and what relates to other funds," Robson said.
"And unfortunately, a lot of the beneficiaries - members - haven't retained paperwork or don't know how much they paid.
"We don't have the capacity to dig through 20 years of paperwork and find that information in the very timely fashion that they want, unfortunately."
Company records show that Youpla's general manager, Leanne Court, and Jamal Idris, an Indigenous former rugby league player who Youpla recruited as an ambassador in 2019, have both resigned as directors of Fund 2. Neither Court nor Idris was involved with ACBF at the time the misconduct alleged in complaints to Afca and before the Royal Commission occurred.
The remaining directors, Wheeldon and Allen, put the company into administration on 24 November.
Youpla did not respond to Guardian Australia's questions and Pattenden could not be reached for comment.
