The Friendly Societies of Australia (FSA) has lodged a submission to be considered as part of the consultation the Government of Western Australia is conducting to develop a new code of practice for pre-paid funerals in WA.
Key policy positions of the friendly societies industry as highlighted in the submission include:
- The draft new WA Government code of practice for pre-paid funerals contains inconsistencies with existing federal government (Commonwealth) legislation;
- The draft code appears to cover funeral investment being placed in a funeral bond and it defines a financial product as being a financial product under the Corporations Act 2001, yet funeral bonds or funeral benefits are specifically not deemed to be financial products under the Corporations Act 2001;
- The process of developing a new code of practice must avoid duplication and unnecessary additional regulation and administration for friendly societies on the basis that friendly societies are already highly regulated under the Australian Prudential Regulation Authority’s prudential standards regime;
- To reduce the risk of consumer/client detriment surrounding cooling-off periods, payment of the funeral investment amount to the investment manager should take place within seven days, regardless of the cooling-off period;
- The proposed draft definitions of “funeral services” and “memorials” are too prescriptive and they should be consistent with the existing definition of funeral expenses according to the Australian Taxation Office;
- To meet the requirement for the sole-purpose test for funeral bonds/pre-paid policies, early release of funeral investments should not be permitted;
- Should a pre-paid funeral contract be cancelled at any time (other than in the cooling-off period), the funds would remain invested, but would be assigned directly to the client, rather than being assigned to the funeral provider; and
- The treatment of GST under a pre-paid contract is the subject of GST law which requires any GST must be paid at the time of signing the contract.
To download a copy of the complete submission, please click here.