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July 24, 2012

ASIC research report on funeral purchase products

ASIC has released Report 292 Paying for funerals: how consumers decide to meet the costs (REP292) surveying a range of funeral products consumers are buying to help pay for their funeral.

The research found that consumers are less likely to pick the best product for their circumstances or take value for money and long term costs into account.

The research reviews:

  • prepaid funeral plans – offered by funeral directors where consumers choose and pay a fixed price in advance for their funeral
  • funeral bonds – investment products that help consumers save for funeral expenses, with the funds withdrawn after death to pay for the funeral
  • funeral insurance – where consumers pay monthly or fortnightly premiums for a fixed amount of cover to be paid out after death.

ASIC has regulatory responsibility for the conduct and disclosure obligations of issuers of funeral insurance and funeral bonds, while the Australian Prudential Regulation Authority (APRA) has prudential responsibility for life insurance companies and friendly societies. Prepaid funeral plans are regulated separately by each state.

As part of its broader review of financial products and services advertising, ASIC is specifically monitoring funeral insurance marketing to ensure consumers are not faced with misleading or deceptive practices.

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Posted 24th July 2012 by David Jacobson in Consumer Law, Corporations Act, Financial Services