Funeral funds target Aboriginal people
The banking royal commission has moved to Darwin to examine issues affecting Aboriginal and Torres Strait Islander people. Some indigenous Australians have been paying for four or five funeral insurance policies for their families, consumer groups say.Even children have been signed up for plans.Consumer advocates say some insurers have exploited the importance of funeral ceremonies in Aboriginal culture to sell unsuitable funeral insurance plans.The Department of Human Services has stopped funeral insurance providers from using its Centrepay bill paying service for people receiving Centrelink payments.
© Glenn Campbell Bryn Jones from funeral insurer ACBF outside the Royal Commission in Darwin on Tuesday.
Tracey Walsh, who works in an Aboriginal cooperative in Victoria, believes she was misled into paying more than $10,000 in funeral insurance premiums for a plan that would only pay out up to $8000 in the event of her death.
As the royal commission probes the finance sector's dealings with Indigenous communities, Ms Walsh told a hearing in Darwin she paid premiums for more than a decade to an insurance a company that she thought was Aboriginal, partly due to its marketing, which included a rainbow serpent.
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Ms Walsh also believed the funeral plan she was signed up to in 2005 would allow any contributions in excess of $8000 to go to her family if she died.
But the insurer, Aboriginal Community Benefit Fund, is not run or owned by Aboriginal people, and her payout was capped at $8000.
T © AAP Tracey Walsh said she was "shocked" to find out ACBF was not an Aboriginal organisation. he Gold Coast-based business, which had to restructure its policies after previous legal action from the corporate watchdog, also admitted that signing up children for funeral insurance was "part of the process" for its sales representatives.
Ms Walsh told the commission she decided to take out a funeral plan from ACBF, after a friend died and she saw the financial cost this imposed on family.
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“I didn’t want to have my mum and dad, who were just pensioners, or my sisters or brothers... to have to do the same thing,” Ms Walsh said, in response to questions from senior counsel assisting Rowena Orr.
Ms Walsh, an Aboriginal woman from the Shepparton area in Victoria, said she met with a representative from the fund and believed they were also Aboriginal, based on his skin colour.
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Kathy Marika was offered hundreds of dollars in Myer and Coles vouchers to convince her to hand over contact details of family, friends, and colleagues.Kathy Marika, a 60-year-old who worked for Bangarra Dance Company, was offered hundreds of dollars in Myer and Coles vouchers to convince her to hand over contact details of family, friends, and colleagues, as part of an aggressive push to sell funeral insurance that she didn't want.
"On the posters it had the rainbow serpent, which is very important to the Indigenous community," she said.
Ms Walsh paid $36 a month in premiums, and believed that once she had paid $8,000 in premiums, this amount would be payable to cover her funeral costs, and any excess money paid in would be paid to her family.
After trying to increase her cover, in 2016 she sought help from the Consumer Action Law Centre, which alleged she was misled into thinking the organisation was run by Aboriginal people. Ms Walsh said she was "shocked" to find out it was not an Aboriginal organisation.
After she lodged a complaint with the Financial Ombudsman Service, the business this year offered to cover her funeral expenses up to $10,000 and that it would no longer charge premiums.
Ms Walsh said she had little choice but to drop her complaint, and other community members had taken out similar policies without understanding how they worked.
“People haven't been told the truth about these policies. I’ve got elders who have been in these funeral funds for years, and they plan to give the money to their families so that they can survive,” she said.
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Counsel for ACBF, Ben McMillan, took Ms Walsh to her application form, which included her signature and an acknowledgement she had viewed a presentation on the funeral plan. Ms Walsh said she did not recall reading the form and denied ticking the box that said she viewed the funeral plan presentation.
The chief executive of ACBF Funeral Plans, Bryn Jones, was questioned by Ms Orr over the company's claim he had been appointed late last year to bring a "fresh and transparent perspective."
Ms Orr took Mr Jones to a media release from last week that referred to "law change" as a reason why it had closed one of its funds to new customers. In fact, the change was a response to legal action from the regulator.
“The law didn’t change, you were found to have breached the law and you then needed to set up operations in a different way as a result of that finding,” Ms Orr said.
Ms Orr also cited figures that more than a third of its policies are for people aged under 18, saying: “Your sales representatives ask parents and grandparents to sign up their children and grandchildren, don’t they?”
Mr Jones said the fund was not "actively" targeting children and grandchildren, but said talking about funeral cover cof children was "part of the process," and it was brought up by potential customers. He defended funeral insurance for children by pointing to much higher rates of infant mortality in Indigenous communities.
Earlier, the commission heard bank fees could chew up as much as a 10th of the incomes of some Indigenous people living in remote areas, and banks were not actively promoting fee-free accounts to eligible customers in these areas.
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