A new mandatory code of practice is now in force for WA’s prepaid funeral industry which aims to safeguard the estimated $170 million being held to pay for future funerals.
The new code which began on 1 March 2021 will ensure that the funds will be managed within secure investments under the name of the client until they are required.
Payments received by the prepaid funeral seller must be forwarded within 16 days of receipt to specified investment managers that are restricted to life insurance companies, friendly societies, licensed trustee companies or the Public Trustee of WA.
There will also be greater clarity and certainty surrounding contracts with all goods and services provided to be detailed and the individual cost of each component and any fees to be included. Prices in the contract will be fixed at the time of signing, so they will be immune from future cost increases and inflation. A cooling off period of 30 days will apply and the contract can only be changed if both parties agree.
Under the code, the contract must outline what happens in the event of insolvency of the funeral organiser’s business; if the client moves away (e.g. interstate); when payments are missed or are late; if the client dies before full payment is made; and under what circumstances a refund is payable.
The new code of practice should give older Western Australians some peace of mind knowing that the money being put towards a future funeral is being protected by being placed in secure investments.
The new rules around contracts and costs will also provide seniors with more certainty by fixing prices and preventing inflation from eroding the value of the contract over time.