ASIC has today issued an information sheet for providers of funeral expenses facilities. Recent changes to the Corporations Regulations mean that entities who sell funeral expenses facilities will generally be required to hold an Australian financial services licence from 1 April 2020.
A funeral expenses facility is a scheme or arrangement for the payment of money when a person dies, for the purpose of paying all or part of the expenses of, and incidental to, the person's funeral, burial or cremation.
This new licensing requirement will provide greater legislative protection to consumers of funeral expenses facilities.
For more information, see Information Sheet 243 Licensing requirements for providers of funeral expenses facilities.
Until 1 April 2020, funeral expenses policies were exempt from being a ‘financial product’ under the Corporations Act 2001 and the Corporations Regulations.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended removing the funeral expenses exemption after identifying harm to vulnerable consumers.
The Government introduced new laws to implement the Royal Commission’s recommendation. The Financial Sector Reform (Hayne Royal Commission Response – Protecting Consumers (2019 Measures)) Bill 2019 was passed by Parliament on 6 February 2020. The Treasury Laws Amendment (Financial Services Improved Consumer Protection) (Funeral Expenses Facilities) Regulations 2019 were made by the Governor General on 28 November 2019 and are in force from 1 April 2020.