New prepaid funeral code – what it means for industry

Fair Trading (Prepaid Funerals Code of Practice) Regulations 2020 (the code) is a new mandatory code of practice for Western Australia's prepaid funeral industry. 

The code ensures any funds are managed within secure investments under the name of the client, until they are required.

The code will only apply to prepaid funeral contracts entered into from 1 March 2021.

Key elements of the code

Informing consumers before they sign a contract

Funeral organisers must give consumers clear information, developed by the investment manager, about where any prepaid funeral funds will be invested.  

Prepaid funeral funds

Within 16 days of receipt of the payment, a funeral organiser must forward all payments received under a prepaid funeral contract (excluding any fee, charge or GST) to an investment manager.

Investment managers are restricted to:   

• a company registered under the Life Insurance Act 1995 (Commonwealth) section 21; or
• a friendly society as defined in the Life Insurance Act 1995 (Commonwealth) section 16C; or
• a licensed trustee company as defined in the Corporations Act 2001 (Commonwealth) section 601RAA ; or
• the Public Trustee as defined in the Public Trustee Act 1941 section 2;

The funeral investment must be designated in the name of the client. The funds are only released after the funeral arranged for the recipient has been carried out, as per the prepaid funeral contract.

Consumer protections 

Under the code:

• the funeral organiser must itemise the cost of each component provided under a prepaid funeral contract as well as the total cost, including GST;
• details of any fees or charges that will or may be charged by the funeral organiser must be set out in the contract;
• a mandatory cooling-off period of 30 days applies to all prepaid funeral contracts;
• the prepaid funeral contract must detail what happens to payments in situations including:
  • bankruptcy or insolvency of the funeral organiser;
  • closure of the business;
  • missed or late payments (e.g. where instalments apply);
  • the recipient moving away (e.g. relocates interstate);
  • the client ending the contract other than under a right in the contract; or
  • where the recipient dies before a payment required under the contract is made;
• a funeral organiser must maintain a register of prepaid funeral contracts sold.   

Transition period

The transition period allows funeral organisers sufficient time modify business processes in order to comply with the code’s requirements. This may include the requirement to amend standard prepaid funeral contracts, website information or printed documentation (e.g. brochures); and to train employees on the code.  

Related information

Frequently asked questions for the funeral industry

Prepaid funerals checklist for funeral organisers

Fair Trading (Prepaid Funerals Code of Practice) Regulations 2020