The Treasury has released for public consultation a set of draft regulations and legislation to apply to funeral expenses insurance policies.
The policies currently enjoy exemptions under the Corporations Act.
Announcing the move, Treasurer, Josh Frydenberg said removing the exemption would see the funeral policies treated the same as other financial products with consumers receiving more protection when taking out funeral expense policies to help fund funerals.
Mr Frydenberg said the need for change was based on evidence presented by the head of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Kenneth Hayne.
Mr Hayne found that many Indigenous people living in regional and remote communities were being misled and pressured into funeral expenses policies.
“These regulations will improve consumer outcomes by requiring providers of funeral expenses policies to hold an Australian Financial Services Licence and be fully regulated by the Australian Securities and Investments Commission,” Mr Frydenberg said.
“Providers of funeral bonds, who operate under the exemption, will also be required to hold a licence.”
However, he said the regulations would not require funeral directors to hold a licence when distributing a funeral bond in conjunction with the arrangement of a prepaid funeral, cremation, or burial service.
“The Government is taking action on all 76 recommendations contained in the final report of the Royal Commission,” Mr Frydenberg said.
“Restoring trust in Australia’s financial system is part of the Government’s plan for a stronger economy.”
