Submission to NSW Fair Trading Public Consultation Draft: Funeral Funds Regulation 2011

CPSA's submission to Fair Trading regarding the regulation of funeral contribution funds.

Download: Submission to NSW Fair Trading Public Consultation Draft: Funeral Funds Regulation 2012 [Adobe Acrobat PDF - 115.79 KB

Summary of Recommendations

Recommendation 1

That the drafted regulation for Clause 6 stand

Recommendation 2

That the drafted regulation for Clause 15 stand

Recommendation 3

That, due to language and other barriers making some consumers’ understanding of pre-paid contracts difficult, the cooling-off period be extended beyond the prescribed 30 days.

Recommendation 4

That the prescribed amount that a funeral provider may keep when a consumer cancels a pre-paid funeral contract be set at a rate that is affordable to people on low, fixed incomes such as the Pension or a Centrelink Allowance. The prescribed fee of $50 inhibits consumers’ ability to reconsider their decisions free of consequence.

_____________________________________________

CPSA supports the objectives of the proposed Funeral Funds Regulation 2011 and the preferred option of putting forward regulations to accompany the Funeral Funds Act 1979. CPSA wishes to comment on a number of clauses of the proposed regulation as listed in the Regulatory Impact Statement under Part 7.1 Impact of Individual Clauses of the Proposed Regulation.

7.1.2.3 Documents to accompany an application for approval of an alteration or addition to the rules of a funeral contribution fund (Clause 6)

CPSA supports the objectives of this provision which allows NSW Fair Trading to ensure no breaches of the Act take place when alterations are made to a funeral fund’s rules. Such financial products are complex in nature and, as the Regulatory Impact Statement posits, there are consumers who may not be adequately financially literate to raise challenges as may be necessary.

Recommendation 1

That the drafted regulation for Clause 6 stand

 

7.1.4.1 Information to be provided to a consumer both before entering into and upon entering into a pre-paid contract (clause 15)

CPSA supports the additional requirements under this provision above those stipulated under the 2006 Regulation. It is fundamentally important that consumers are made fully aware of what it is that they are paying for: the included services and products, as well as those services or products that they may/will be charged for only at the time the service is provided. Equally important is the need to ensure that consumers understand and are comfortable with the procedures should something take place to the contracted funeral provider or if a consumer were to move to a location not serviced by that provider. It is critical that consumers are provided clear information on which they can base their decision on whether to proceed with a pre-paid funeral with a particular provider.

Recommendation 2

That the drafted regulation for Clause 15 stand

 

7.1.4.3 Cooling off period for pre-paid contracts (clause 17)

CPSA supports the objectives of this provision, but proposes some amendments.

Clause 17(1) prescribes a cooling-off period of 30 days within which consumers can cancel a pre-paid funeral contract. CPSA believes that there is good reason to extend the cooling-off period to ensure that consumers do not become bound to a contract that may be unnecessary or unwanted.

CPSA has heard of situations where people have been sold a pre-paid funeral contract that they did not need or want due to both the opportunism taken by the funeral provider and a lack of understanding due to language or other barriers on the part of the consumer. In one instance a woman was sold a pre-paid funeral contract shortly after her husband had passed away, even though she was already covered by the contract that had paid for her husband’s funeral. After her husband had died, she went to the funeral provider to see how much she was still required to pay to cover her funeral which was a direct committal. The provider (unnecessarily) set up a new contract for her. She had not understood that this was the case and by the time she had discussed this with another family member, the cooling-off period had elapsed. Although she was only looking to pay off the remainder of her direct committal funeral, she was left to essentially pay off two services which of course included two coffins. Following representation by her son, the arrangement reached with the funeral director was that the additional money above what was necessary for her direct committal was put towards flowers for the service. This, of course, left her significantly out of pocket and with a service that was not in line with her wishes.

Recommendation 3

That, due to language and other barriers making some consumers’ understanding of pre-paid contracts difficult, the cooling-off period be extended beyond the prescribed 30 days.

Clause 17(2) prescribes a $50 fee to be charged to consumers who wish to cancel their pre-paid funeral contract within the cooling-off period. CPSA believes that a fee inhibits consumers from feeling confident about their ability to reconsider their decisions free of consequence.

CPSA speaks to many pensioners and others on low incomes for whom $50 is a considerable sum of money. Knowing that such a fee can be charged for cancelling the contract can have two negative consequences for both the consumer and the provider. The consumer may feel compelled to continue with a product that is not suitable to them; or they may choose not to go ahead with the contract in the first place, steering clear of pre-paid funerals completely. Therefore, CPSA proposes that a nominal fee that is affordable to people on low, fixed incomes such as the Pension or a Centrelink Allowance, should be prescribed.

Recommendation 4

That the prescribed amount that a funeral provider may keep when a consumer cancels a pre-paid funeral contract be set at a rate that is affordable to people on low, fixed incomes such as the Pension or a Centrelink Allowance. The prescribed fee of $50 inhibits consumers’ ability to reconsider their decisions free of consequence.