The Australian Securities and Investments Commission (ASIC) has announced that entities who sell funeral expenses facilities will be required to hold an Australian financial services licence (AFSL) from 1 April, 2020.
A funeral expenses facility would be a scheme or arrangement for the payment of money when a person dies, for the purpose of paying all or part of the expenses of, and incidental to, the person's funeral, burial or cremation.
This new licensing requirement would provide greater legislative protection to consumers of funeral expenses facilities, the regulator said.
Until 1 April 2020, funeral expenses policies were exempt from being a ‘financial product’ under the Corporations Act 2001 and the Corporations Regulations.
ASIC said that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended removing the funeral expenses exemption after identifying harm to vulnerable consumers.