Federal and state authorities expressed concerns about the conduct of the now-disgraced Aboriginal Community Benefit Fund (ACBF) from its very first year of operation, but failed to bring it into line despite several opportunities.
Both New South Wales Fair Trading, which oversees funeral expenses insurance funds, and the Australian Securities and Investments Commission, which oversees financial products, including insurance, raised issues with the fund, which later traded as Youpla, on a number of occasions over the past 30 years.
Unlike most insurers, Youpla-ACBF was never regulated by the Australian Prudential Regulation Authority, which has strict rules designed to stop insurance companies going broke.
Instead, it straddled the margin between laws administered by Fair Trading and Asic, and managed to expand despite regulators raising concerns about its operation from the beginning.
Asic was also concerned about Youpla. In 1999, it secured a federal court order forcing ACBF to change its marketing materials by removing the Aboriginal flag and adding a disclaimer that it was a private company, not connected to the government or any Aboriginal organisation.
However, ACBF continued using the red, yellow and black colours of the Aboriginal flag to sell its insurance.
The court found that ACBF could not take advantage of a loophole in the law that allowed companies to hawk insurance covering funeral expenses because it paid out in cash, rather than covering the actual bills incurred with a funeral director.
ACBF started paying funeral expenses instead of cash and Asic sent the company a letter saying it intended to take no further action.
The regulator returned to the case after the financial services royal commission used ACBF as a case study in 2018.
In April 2020, the government finally closed another loophole that allowed ACBF and other funeral expenses insurance companies to operate without a financial services licence.
This meant the company was unable to take on any new customers.
Meanwhile under NSW law Youpla was required to send Fair Trading an actuarial report for each of its funds every three years and a financial report every year.
The rest of Youpla went on to collapse in March 2022, leaving bodies sitting in the morgue because families were unable to bury loved ones.
Asic declined to comment. Whether the case it is pursuing can go ahead now that Youpla has collapsed will be decided in the federal court in June.
Rudolph says this is too little too late and accuses the authorities of being slow to act.
