In late October the NSW Parliament amended the Funeral Funds Act 1979 to reform the prudential management of funeral funds in NSW and to enhance protection for consumers who deal with those funds. Pre-payments made by consumers for funeral services, which may be made many years in advance of delivery, have been strengthened by the amendments. The changes are also designed to benefit industry by removing outdated provisions and by streamlining the requirements for the administration of funeral funds, http://www.parliament.nsw.gov.au.

The reforms to the legislation were largely based on the recommendation of the National Competition Policy Review of the Act, which had commenced in 2000. The Office of Fair Trading undertook extensive consultation with relevant stakeholders on the Review’s recommendations.

Changes to the legislation include:

• Introduction of annual reporting to members of contributory funds, which will reduce uncertainty for members and their families about the precise nature of an entitlement to be paid
• Introduction of a cooling-off period for pre-paid contracts, which will provide greater protection for vulnerable consumers, particularly the elderly, who may be more susceptible to pressure to buy a pre-paid funeral service
• Removal of the maximum number of fund directors permitted to manage a contributory funeral fund. Currently, the Act provides that funeral contribution funds may not have less than three and no more than seven directors
• Removal of the cap on the maximum level of benefit that can be made to a consumer under a contributory fund
• Removal of the cap on management expenses for both pre-arranged and contributory funds
• Guidelines for the approval of transfers and amalgamations of funds to be prescribed
• Extends some of the grounds for cancellation of pre-arranged funds to contributory funds
• Strengthens the Fair Trading Commissioner's powers to take action against a fund, if a fund has misrepresented the financial stability of its investments or has not fully disclosed all management expenses charged to administer the fund
• Provides power to the Commissioner to prevent someone of questionable repute becoming involved in the management of the fund
• Requires a pre-arranged fund to provide certain information to the consumer before they enter into a pre-arranged contract, which will effectively operate as a mandatory disclosure requirement to consumers.