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FEATURED AUSTRALIA: Why the collapse of the Aboriginal Community Benefit Fund is a reckoning for regulators – ABC News Report

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#AceNewsDesk – After nine years as consumer affairs reporter, I’ve covered some of the biggest examples of skulduggery on the beat: However, as I reflect on my time at the ABC — which is shortly to come to an end — it’s a story that’s happening right now that stands out as the most shameful.

It was a slow-moving disaster that unfolded right under the noses of regulators. So, why did the Aboriginal Community Benefit Fund keep taking money from people for so long?

It was back in the 1990s that a British-born businessman called Ron Pattenden, along with two Aboriginal health workers, set up a company offering funeral insurance to First Nations consumers.

Sorry Business is among the most important cultural traditions for many Indigenous Australians.

Nikki Foy sits at her kitchen table.
Nikki Foy, in Ballarat, is one of many who has spoken to the ABC in the aftermath of Youpla’s collapse.(ABC News: Amy Bainbridge)none

It’s also one of the most expensive.

So it was no surprise the products sold by Aboriginal Community Benefit Fund (ACBF) — payment plans for funerals — were welcomed by families.

In their thousands, they opened their homes and wallets to the sales people who went, door to door, in Aboriginal communities spruiking the product.

Almost immediately, concerns were raised about the business practices of the ACBF.

A regulator stepped in, the company temporarily ceased trading, and consumers were — at least briefly — protected.

However, instead of the ACBF going out of business, it restarted, and rapidly expanded.

Over the years, alarms were again raised about the way it was selling its policies to people with low financial literacy.

Parents were encouraged to take out funeral insurance for babies and primary-school-aged children.

It marketed itself as Aboriginal-owned and run, even though it was not.

And it wasn’t using the funds to pay for community projects, as it initially promised consumers.

Perhaps most galling of all, the company was allowed to deduct millions of dollars directly from people’s Centrelink payments between 2001 and 2017, despite a warning consumers were vulnerable if the company collapsed.

ASIC did run three court cases against the company.

However, like a hydra, ACBF always grew another head, eventually morphing into four companies.

When it finally collapsed earlier this year, it left 14,500 customers at least $66 million out of pocket, according to a recent liquidator’s report.

An ACBF newsletter encouraging members to sign up their children.
An ACBF newsletter encouraging members to sign up their children in 2008.(Supplied)none

Advocates estimate thousands more customers lost money over the years. They believe more than 30,000 people have been impacted.

By the time it collapsed, millions of dollars had been sent offshore to an underwriting company associated with Ron Pattenden — entirely legally according to an earlier court ruling — and he was enjoying his multi-million-dollar yacht and waterfront apartment in New Zealand.

A white luxury sports yacht on water at dusk.
Ron Pattenden’s 32.9-metre sport yacht Dream Catcher.(ABC News: Amy Bainbridge)none

When we found him in May this year, he said he was not to blame for the demise of the company.

While liquidators are still working to establish why the company collapsed, ultimately it’s those with the responsibility of policing the financial system who must bear some of the blame.

But who was in charge?

‘Regulators just didn’t step in’

It’s been a challenge to make sense of how this business was allowed to operate for so long.

At various times, ASIC, Fair Trading NSW, and the Australian Financial Complaints Authority all investigated and took action against the company.

Ultimately, the buck seemed to stop with no-one.

ACBF continued making money from some of the country’s poorest communities.

It was only when ACBF’s conduct was exposed at the banking royal commission that real action was taken, and its licence to sell new products was withdrawn.

Regulators and the government were warned back then that, if it couldn’t sell new products, it was at risk of collapse and the money of 14,500 Indigenous people with it.

Yet nothing was done to safeguard their money.

It’s left advocates wondering if that was because those customers were black.

A woman stands looking at the camera in front of a desk.
Mob Strong Debt Help’s Bettina Cooper wants to see all Youpla customers compensated.(ABC News: Kirstie Wellauer)none

“Part of me wonders whether First Nations people aren’t valued as much as others,” Mob Strong Debt Help financial counsellor Bettina Cooper said.

“Part of me thinks that the regulators just didn’t step in and do what they should have done — which is protect people who are vulnerable, protect people who have made sacrifices, protect people who have been targeted for a particular product.”

Assistant Treasurer Stephen Jones appeared to acknowledge the blind spot within the halls of government in Question Time this week. 

“If there had been a Voice to Parliament in 2020, would it have told us that the collapse of this company was going to cause to these communities and these families the sort of harm that we’ve described?” he said.

 “The answer is: Yes.”

Where is the outrage?

Australia’s history is littered with examples of consumers being misled, deceived or ripped off by companies and corporations.

There’s been the mis-selling of insurance policies on a grand scale, charging customers fees for no service, and corporate collapses that have left thousands of investors without their savings.

In recent times, the scandal of Melissa Caddick ripping off millions of dollars from her clients has titillated the Sydney media and affluent social circles.

As the national consumer affairs reporter, I’ve covered some of the worst examples of businesses behaving badly

ACBF’s conduct stands out as one of the biggest failures of regulatory action and one of the most egregious examples of consumer harm in Australia’s history.

Yet, apart from reporting by the ABC, NITV and The Guardian, media coverage has been limited.

Some people, when I tell them about this story, say it’s up to the consumer to be responsible for what they’re signing up for.

However, in this case, there was a huge power imbalance between the consumer and the company signing them up to a contract.

There was a cultural need that was exploited by a profit-making business.

People paid thousands, often forgoing life’s essentials simply to keep up with their regular payments.

“This has actually become the most-traumatic consumer rip-off of Indigenous people I’ve ever seen in Australia,” financial counsellor Alan Gray said.

Many paid thousands of dollars over decades, only to be told their money was gone.

Venessa Poelina stands on the beach in Broome. She stares into the camera.
Vennessa Poelina is one of thousands of Youpla customers who contributed to the company for years.(ABC News: Andrew Seabourne)none

“It’s real mixed emotions, you know, like you kind of want to feel angry,” Broome resident Vennessa Poelina said.

“Then you get frustrated and then you feel sad because the cost burden is going to be on your family to look for money for your cremation.”

It gives pause for thought as to why oversight of the regulator system benefited the corporation, rather than protected the consumer.

Perhaps it was a blind spot because the spotlight is more easily focused on salacious scandals with alluring headlines and vocal victims.

In this case, the victims — while ably represented by advocates — were out of sight of authorities.

Perhaps authorities just didn’t care enough.

It appears nobody was willing to step in and take ownership of the issue.

Often consumers find it hard to get heard unless the media gets involved.

Aaron Davis from the Indigenous Consumer Assistance Network (ICAN) is justifiably frustrated.

“We brought out the issue about the connection between [Centrelink] and ACBF in 2007, and it took until 2015 for them to be taken off [the automatic-deduction system],” he said. 

“And, so, I think there is a lot of culpability in the government actually making the ACBF’s system, their financial systems, thrive.”

What happens next?

In perhaps an admission of breathtaking failure of the government and regulators, the government has agreed to a multi-million-dollar interim solution to help families.

It has agreed to guarantee policies until November 30 next year for customers who were active on April 1, 2020, while it works out a broader solution for the thousands of people impacted by the collapse.

Advocates say it’s a welcome first step, but they want more.

“I want to see the government commit to everyone getting their money back,” Kuku Yalanji elder and ICAN director Daphne Naden said.

While a comprehensive solution is needed for all impacted customers, I hope this leads to broader change to protect consumers from predatory behaviour.

Moreover, this should be a warning for regulators to listen.

They must have concern for the full spectrum of Australians, not just those in capital cities or who have the loudest voices. 

#AceNewsDesk report ………..Published: Aug.04:  2022:

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