Financial counsellors have welcomed tighter regulations on a multi-million-dollar segment of Western Australia’s funeral industry.

Key points:

  • A code of practice to safeguard the $170 million in the prepaid funeral sector is finally introduced in WA
  • Operators must provide itemised contracts with a 30-day cooling-off period
  • Financial counsellors welcome the changes but call for further measures

Prepaid funerals, where packages and plans can be purchased in advance, have grown increasingly popular in recent years as people look to ease the burden of their death on loved ones.

West Australians currently have $170 million invested in products which have gone largely unregulated until now, according to the Department of Consumer Protection.

With so much money at stake, the state government has moved to shore-up the sector by introducing a code of practice.

Vulnerable lose thousands to rogue operators

The code has been well received, but there are calls for the government to go further to ensure vulnerable people are not ripped off.

Financial counsellor Veronica Johnson from Broome Circle has spent months working with mostly Indigenous clients in the remote Kimberley tracking down rogue operators.

Some of her clients have been cheated out of thousands of dollars through misleading schemes like funeral insurance.

“We’re constantly getting clients coming forward. There’s so many more that we possibly couldn’t get to,” she said.

A woman sits in front of a noticeboard with posters.

Financial counsellor Veronica Johnson has helped many vulnerable residents who lost thousands to rogue funeral operators.(

ABC Kimberley: Hannah Barry

)

The problem, she said, often stemmed from clients feeling confused or pressured to sign a contract they do not understand.

While prepaid funerals are less problematic than insurance, she believed the code will encourage all operators to provide greater transparency.

“It’s definitely a step in the right direction,” she said.

Under the new rules, operators have to clearly detail the individual cost of each component in the package and any additional fees.

Prices will be fixed at the time of signing so they won’t grow with inflation or future cost increases, and there will be a 30-day cooling-off period.

They must also forward payments within 16 days to specified investment managers that are restricted to insurance companies, friendly societies, licensed trustee companies, or the Public Trust of WA.

There are provisions to ensure customers are not caught short if they move interstate, pass away before full payment is made, or if the funeral business goes under.

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The pre-paid funeral plan leaving thousands of Australians out of pocket.(7.30)

Industry welcomes safeguards

Adrian Barrett from the Australian Funeral Directors Association (AFDA) said the industry consulted with government on the code to ensure it was well targeted.

“It’s good for the industry if consumers are confident that the money they invest in preplanning their funeral is safe,” he said.

Adrian Barrett portrait photo. Man stands in garden.

AFDA’s Adrian Barrett says the code will give consumers confidence that their money is protected.(

Supplied: Australian Funeral Directors Association

)

For the first time, the code sets out how a prepaid funeral contract needs to be presented — including font size and spacing — although Mr Barrett said “nothing is ever perfect”.

AFDA members are already governed by a codes of conduct and ethics, but Mr Barrett said the latest code brings the entire industry into line with those standards.

Fake red and white flowers in front of a gravestone.

The Department of Consumer Protection says it was surprised by the growing popularity of prepaid funerals.(

Flickr: Muffy Tyrone

)

The Department of Consumer Protection’s Penny Lipscombe said the code should provide West Australians with peace of mind.

“Prepaid funerals are becoming a very popular product, and when we looked at this a few years ago we were surprised at just how much money consumers had invested,” she said.

While Ms Johnson was happy with the code, she said the government could do more to protect vulnerable residents.

She has called for interpreters to assist Indigenous residents.

“[For our clients] English is a second language, so how do you get clarity without an interpreter or someone who can really explain and give that clarity to clients who have low literacy and low numeracy,” she said.

Prepaid funeral code of practice introduced to safeguard WA’s $170 million sector
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