Home / Life Insurance / Draft laws target funeral expense mis-selling
7 October 2019
The Federal Government has released draft legislation to bring funeral expenses policies under the same scrutiny as similar financial products after the Hayne royal commission heard evidence of high-pressure selling tactics.
The legislation and regulations will require providers to hold an Australian Financial Services Licence and will make them subject to Australian Securities and Investments Commission oversight.
“In particular, the Government is acting on the evidence presented by Commissioner [Kenneth] Hayne that many Indigenous people living in regional and remote communities are being misled and pressured into funeral expenses policies,” a statement from Treasurer Josh Frydenberg’s office says.
The royal commission heard that funeral life and expenses polices are both life insurance products, but the expenses cover is carved out from the definition of financial product in the Corporations Act.
Commissioner Hayne said the exclusion could not be justified and all forms of funeral insurance should be subject to the same regulatory regime.
“This is particularly important given the concerns that I hold about the value of these types of products,” he said.
The proposed changes would mean funeral expenses are covered by anti-hawking rules that prevent unsolicited telephone sales.
Submissions on the draft laws are due by October 18.