The Federal Court has ordered a $1.2 million penalty against Aboriginal Community Benefit Fund (ACBF) Funeral Plans for misrepresenting the sale and promotion of funeral expense insurance to Aboriginal people.

The Court found that ACBF represented to ACF plan holders 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.

ASIC Deputy Chair Sarah Court said ASIC "took the case to Court in October 2020 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."

The court did not accept ASIC's case that ACBF had falsely represented that: it was owned or managed by an Aboriginal person or persons; the ACF Plan had Aboriginal community approval; or that 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.

ACBF Funeral Plans, a wholly owned subsidiary of Youpla Group, offered, promoted and sold the ACF Plan, a funeral expenses insurance policy, primarily to Aboriginal consumers.

Plan holders of the ACF Plan paid fortnightly premiums for their nominees, such as their family members, to be covered for funeral related expenses up to the selected benefit amount. Plan holders made these regular premium payments to keep the cover on foot.

The company was the subject of a case study in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, leading ASIC to commence proceedings in this matter in October 2020.

On 11 March and 27 April 2022 respectively, ACBF Funeral Plans and Youpla Group went into liquidation. ASIC sought leave to continue the proceedings due to the importance of general deterrence in relation to the defendants' conduct.

ASIC and NSW Fair Trading made a joint application to the Supreme Court for orders appointing special purpose liquidators to investigate whether money can be recovered for creditors of the Youpla Group companies. ASIC commenced civil penalty proceedings in the Federal Court against five former directors and officers of ACBF Funeral Plans and Youpla Group for breaches of their duties last month.

Consumers who have been affected by this matter can contact financial counselling and legal services organisations such as Mob Strong Debt Help to understand their options.

ASIC acknowledges that the conduct of ACBF/Youpla may have caused significant distress for affected consumers. 13 YARN (13 92 76) is a First Nations crisis support line available 24 hours a day, 7 days per week.