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Summary: Consultation Draft of the Fair Trading (Pre-paid Funerals Code of Practice) Regulations 2018
The prepaid funeral code, which came into effect March 2021, ensures funds are managed within secure investments. It sets rules around contracts and costs also provide certainty by fixing prices and preventing inflation from eroding the value of the contract over time. More information is available for consumers on buying a prepaid funeral of for businesses on prepaid funerals page.
A pre-paid funeral is a contract entered into with a funeral organiser in which payments are made for the provision of funeral services in the future. However, a pre-paid funeral contract does not include a contract to carry out funeral services between a client and a cemetery manager (e.g. Metropolitan Cemeteries Board). One of the attractions of pre-paid funerals is that prices are usually at today’s prices, thus avoiding inflation and other rising costs.
Western Australia (WA) currently has no specific legislation regulating pre-paid funerals, as exists in most other States and Territories. Some protections exist under the Australian Consumer Law (ACL) but these are aimed primarily at ensuring that sellers do not engage in misleading, deceptive or unconscionable conduct; that goods and services are of acceptable quality and provided with due care and skill and that contracts are not unfair. The ACL does not directly protect the investments of those who have prepaid money towards their funeral.
At present, many funeral directors in WA abide by a voluntary standard for pre-paid funerals which was developed by the Australian Funeral Directors Association (AFDA). However the degree of compliance with that standard is unclear.
The Government is now developing a mandatory code of practice for pre-paid funerals to give consumers greater consistency, clarity and certainty when investing in pre-paid funerals and to guard against loss of monies paid by them in advance. The code of practice would be made under the Fair Trading Act 2010 (FTA) and would apply to sellers and brokers of pre-paid funerals.
The consultation code of practice has been prepared in accordance with the requirements of the FTA.
In December 2011, a Consultation Regulatory Impact Statement (Consultation RIS) was released which advanced five options for the regulation of pre-paid funerals in WA. Recommendations flowing from an earlier consultation process, contained in a 2007[1] report, formed the basis of the five options.
Submissions to the Consultation RIS were received from consumers and key industry stakeholders. Analysis of the submissions showed the preferred option to be the introduction of a code of practice under the FTA, which would be based largely on the pre-paid funeral standard of the AFDA, insofar as it relates to pre-paid funerals, and the recommendations contained in the 2007 report. Details of the AFDA pre-paid funeral standard and the recommendations of the 2007 report are provided in Appendix 1.
In October 2016, Consumer Protection conducted a survey of all funeral directors in WA which revealed that the size of the pre-paid funeral market was significantly larger than estimated and growing rapidly. With the ever increasing amounts of funds now being held by the pre-paid funeral industry, it was considered that tighter controls be placed around the security of these funds. While there is no suggestion of any misuse of funds, the survey revealed a potential risk in the absence of mandatory regulation.
The objectives of the draft code of practice are to address some of the problems which can exist for consumers of pre-paid funerals. These are as follows:
AFDA’s Pre-paid Funeral Standard states that:
The 2007 Final Report recommended that a code of practice be established under the Fair Trading Act 1987[2] to regulate:
The 2007 Final Report also recommended that regulation of pre-paid funerals only apply to future contracts.
Footnotes
[1] Final Report, Regulation of prepaid funerals, November 2007.
[2] The Fair Trading Act 1987 was superseded by the Fair Trading Act 2010.
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