Funeral insurer targeting Indigenous Australians ignored court orders
A funeral insurer that heavily targets Indigenous Australian customers failed to include a disclaimer in some of its advertising that it was not an Aboriginal organisation, breaching Federal Court orders, and has still not acted on 2015 recommendations from the corporate watchdog.
The royal commission into financial misconduct on Wednesday morning continued its scrutiny of the Aboriginal Community Benefit Fund, with chief executive Bryn Jones grilled by counsel assisting Rowena Orr.
Mr Jones, who acknowledged he had no formal qualifications or experience in insurance, was taken to instances where the business had not followed a 1999 court order that it had to include a disclaimer in its ads.
The disclaimer that ACBF is neither an Aboriginal body, nor linked to the government, had been required since 1999 as a result of legal action from the Australian Securities and Investments Commission, which had accused the company of misleading and deceptive conduct.
The orders also said it could not use words to the effect that it was "established to advance the welfare of the Aboriginal community."
Omitting disclaimers
Citing an internal memo from ASIC, Ms Orr showed Mr Jones an online banner ad on the National Indigenous Times website in 2013 that included the ACBF logo and described its product as “Australia’s only Aboriginal-dedicated funeral plan.”
"It doesn't include any disclaimer, does it Mr Jones?" Ms Orr asked.
"It doesn't," he replied, saying he had not seen the ad before.
"This was a breach of the orders made by the Federal Court, wasn't it, Mr Jones?," she said.
"It appears to be."
Ms Orr also showed Mr Jones a script from an ACBF radio advertisement in 2012.
“The script doesn’t include the disclaimer, does it?” Ms Orr said.
“No,” he replied.
Customer Tracey Walsh on Tuesday told the commission she had been misled into taking out a policy, partly because she thought it was an Aboriginal business, based on marketing that included a rainbow serpent image.
Ms Orr granted that some of the insurer's other advertising, some of which was placed in the Koori Mail, did include the disclaimer as required.
ASIC recommendations ignored
Funeral insurance, which consumer groups have warned is "predatory," was the subject of a critical 2015 ASIC report, which recommended insurers provide clients with an up-front estimate of the policy's total cost, and clearly and prominently disclose the risk that they could pay more in premiums than they stand to receive as a payout, as happened to Ms Walsh.
“Does ACBF do this?” Ms Orr asked, referring to the risk disclosure
“No,” Mr Jones acknowledged.
And despite the fact that the recommendation was made almost three years ago, Mr Jones conceded ACBF did not provide an up-front estimate of the total cost of the policy.
Mr Jones said it intended to do this, but he was not able to say why it had not yet abided by ASIC’s 2015 recommendation.
Ms Orr asked Mr Jones several times if his statement provided to the commission were in fact his words, and also quizzed Mr Jones on his employment background and how he came to be running the insurer.
'Do you have any qualifications?'
Asked how he got the job late last year, Mr Jones said he had been "introduced" to the founder of the privately-owned Gold Coast-based business, who he said "banks with my father".
His previous paid employment was teaching children sport, and working in the information technology sector, he said.
“Do you have any qualifications Mr Jones?” Ms Orr asked.
“I don’t,” he replied.
The hearing continues.