ASIC Initiates Legal Action Following Federal Court Verdict in Funeral Insurance Case
ASIC Initiates Legal Action Following Federal Court Verdict in Funeral Insurance Case
The Australian Securities and Investments Commission (ASIC) has lodged an appeal to contest a Federal Court ruling in connection with one of the regulator's allegations against ACBF Funeral Plans.
In a ruling issued last month, Justice Goodman determined that the insurer had engaged in deceptive and false representations while selling its products to Indigenous customers and ordered the company to pay a $1.2 million penalty.
The appeal will be presented before the Full Federal Court on a yet-to-be-determined date.
Sarah Court, the Deputy Chair of ASIC, stated that the decision to challenge the ruling was prompted by concerns that misleading representations had been made to First Nations people, leading them to believe that ACBF and its funeral plan had Indigenous ownership and management. According to ASIC, this effectively deceived many Aboriginal consumers into purchasing the plan.
Justice Goodman also rejected two other ASIC claims against the funeral insurance provider, and the regulator has chosen not to appeal those decisions. The allegations that ACBF falsely represented that the Aboriginal Community Funeral Plan (ACF Plan) had received endorsement from the Indigenous community and that the product was more advantageous to Aboriginal consumers than other funeral insurance options available at the time were both dismissed.
These misleading representations led customers of the ACF Plan to believe that they would receive a lump sum payment equivalent to their selected benefit amount, when in reality, they would only be reimbursed for funeral-related expenses up to the benefit amount, upon the provision of proof of incurred expenses.
ACBF Funeral Plans is a part of the Youpla Group, which experienced a collapse last year. Subsequently, the Federal Government established a redress scheme for Indigenous policyholders affected by Youpla's issues.
Youpla encountered difficulties after its use of high-pressure sales tactics to market nearly valueless products to predominantly Indigenous customers was exposed during the 2018 Hayne royal commission.