All funds for funerals and funeral expenses invested in Western Australia should be held independently and separate from funeral directors, according to the Friendly Societies of Australia (FSA).
The recommendation is contained in a supplementary submission the FSA has lodged with the WA State Government, which is conducting consultation as part of the process of developing a new code of practice for pre-paid funerals in WA.
It is based on the fact that, if implemented, this would offer consumers better protection compared with arrangements where funeral directors have associated trusts for holding such funds.
Funeral directors are not subject to the same level of financial services oversight or prudential regulation as friendly societies (and other financial institutions). Therefore, there is a greater consumer risk if funeral directors (together with their associated trusts) run into financial difficulties.
Arrangements which are similar to the FSA’s recommendation already exist in Victoria and Tasmania.
To download a copy of the FSA’s supplementary submission, please click here.