The law should be amended to:
- remove the exclusion of funeral expenses policies from the definition of ‘financial product’; and
- put beyond doubt that the consumer protection provisions of the ASIC Act apply to funeral expenses policies.
The Government agrees to remove the exemption for funeral expenses policies from the definition of financial products for the purposes of the Corporations Act and ensure that it is clear that the consumer protection provisions of the Australian Securities and Investments Commission Act 2001 (ASIC Act) apply to funeral expenses policies.
The Royal Commission has uncovered evidence of the significant harm that can be caused to vulnerable consumers through the poor sales practices adopted by some funeral expense policy issuers.
The Government has introduced the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 into Parliament and consulted on related Regulations. The proposed Product Intervention Powers (PIP) will enable ASIC to intervene in the sale of funeral expenses policies where there is a risk of significant consumer harm.
The Government will also restrict the ability of firms to use terms such as ‘insurer’ and ‘insurance’ to only those firms that have a legitimate interest in using terminology regarding insurance (for example APRA‑regulated insurers, brokers and other distributors) to avoid any confusion for consumers as to the nature of the products they are purchasing.