The Aboriginal Community Benefit Fund (ACBF), owned by collapsed insurance company Youpla, sold junk funeral policies to Indigenous people across the country for decades, including targeting communities where English wasn't the first language and with low literacy levels.
Youpla was exposed during the 2018 banking royal commission, but not before thousands of people paid for inappropriate plans, including through Centrepay, where money is automatically deducted from social security payments.
Indigenous Affairs Minister Linda Burney said the Youpla Support Program will begin on July 1, when an interim plan ends, and is expected to help more than 13,000 people recover from financial loss and provide certainty to families.
"Losing loved ones can be one of the most traumatic events, made harder still for those First Nations people affected by the collapse of the Youpla funeral fund," she said.
"This measure will hopefully bring peace of mind to thousands of families impacted by the collapse of the Youpla Group."
In September the Federal Court handed Youpla a $1.2 million fine for misrepresenting its junk funeral policies to Indigenous people, finding it had told plan holders they would receive a lump sum payment, when in fact they would only be reimbursed for expenses they could prove had been incurred.
The company collapsed in March 2022, with more than 10,000 families losing out on their funeral plans.
The new program will be for people who held an active policy on or after August 1, 2015, when the Commonwealth removed Youpla policies from Centrepay, acknowledging the risks posed to vulnerable customers.
Under the program, eligible recipients will be offered the choice of a resolution payment – assessed at 60 per cent of the premiums paid up to the value of the insurance - of a prudentially-regulated funeral bond or opt out for a cash payment.
To assist eligible recipients, financial counselling will be offered to help them better understand the options available under the Youpla Support Program.
The $97 million program will run for two years, receiving applications until June 30, 2026.
The initiative follows the interim Youpla Group Funeral Benefits Program, announced by the government in July 2022, which allows the families of former members to claim a grant to cover immediate funeral expenses and will continue to accept applications until 30 June 2024.
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