Indigenous people who have paid tens of thousands of dollars in premiums to a predatory funeral expenses insurer could be left with no access to compensation if the insurance group goes under, the Consumer Action Law Centre has warned.

The funeral insurance company Youpla, better known by its previous name the Aboriginal Community Benefits Fund (ACBF), has faced ongoing criticism for its poor value insurance products and targeting of Aboriginal communities since the 1990s.

The company has been taken to the Australian Financial Complaints Authority 28 times recently over misleading and deceptive conduct and has been barred from selling new products to customers.

With more complaints against Youpla yet to be resolved, there are now concerns the company is at risk of going under and will be unable to repay former clients the money they are owed or issue funeral pay-outs.

The Consumer Action Law Centre (CALC) is calling for Youpla/ACBF to be included in a new compensation scheme which is being established as a recommendation of the banking royal commission.

The $250 million Compensation Scheme of Last Resort is designed to protect people who are left out-of-pocket and unable to seek redress in the event that a financial services firm collapses.

However, funeral insurance will not be among the five products and services that will fall under the scheme when it’s introduced in the next parliamentary sitting.

The Consumer Action Law Centre’s Aboriginal Policy Officer Sam Rudolph saidif Youpla collapses without being included in the scheme the effect on Aboriginal communities will be “devastating.”

“Some people have paid thousands – tens of thousands – of dollars into this funeral product, so we’re really concerned about the impact that’s going to have. That’s a lot, in a way that’s people’s life savings that have gone into these products.

We’re really concerned that if this company does become insolvent or they do go under that these people aren’t going to see any of this money back. The impact on community is going to be so devastating.”

The Consumer Action Law Centre is calling for the financial services industry to step up and support calls for Youpla to be included in the scheme.

It’s pointing to the Australian Banking Association’s Indigenous Statement of Commitment which says that the ABA and its members ‘want to make a difference for Indigenous people and communities,’ and that the ABA will “advocate [for] regulatory reforms that seek to address unscrupulous practices which undermine consumer protection laws and take advantage of Indigenous people and communities, especially Indigenous consumers using non-mainstream and/or unsafe financial products and services.’

Ms Rudolph said the inclusion of Youpla in the Compensation Scheme of Last Resort would be “one step towards reconciliation.”

The Consumer Action Law Centre has written to Federal Treasurer Josh Frydenberg to advocate for the inclusion of funeral insurance in the scheme.

Ms Rudulph said the letter had been acknowledged but had not been replied to.

“If [Youpla] is included it would show not only that the government supports what we’re saying but that it supports First Nations people. For us, we see it as one very, very small step towards reconciliation and also realising that, in a way, it’s the government that has let this happen and allowed this to happen for such a long time.

People have raised issues around this company for so many years since the 1990s and this is one way to acknowledge and in a way show that they’re sorry for allowing this to happen.”

The Federal Treasurer Josh Frydenberg and the Australian Banking Association have been contacted for comment.