The Government has released for comment exposure drafts of  Financial Services (Improved Consumer Protection) (No. 1) Regulations 2019: funeral expenses facilities,  to remove the exemption for funeral expenses policies from the definition of financial products for the purposes of the Corporations Act 2001, and the Financial Services (Improved Consumer Protection) (No. 1) Bill 2019: Funeral Expenses Facilities, to apply the consumer protection provisions of the Australian Securities and Investments Commission Act 2001 to funeral expenses policies.

UPDATE: The Treasury Laws Amendment (Financial Services Improved Consumer Protection) (Funeral Expenses Facilities) Regulations 2019 were registered on 29 November 2019.

Currently, funeral expenses policies are carved out from the definition of ‘financial products’ by paragraph 765A(1)(y) of the Corporations Act 2001 and regulation 7.1.07D of the Corporations Regulations 2001. The effect of the carve-out is that providers of funeral expenses policies do not have to obtain an Australian financial services licence, are not bound by the general conduct obligations contained in section 912A of the Corporations Act 2001 and are not restrained by the anti-hawking provisions in the Corporations Act 2001.

The Corporations Act 2001 will be amended to include a new provision that expressly provides that funeral expenses policies (described as funeral expenses facilities) are not funeral benefits. As a result, funeral expenses policy providers will be subject to the financial service licence requirements in the Corporations Act to act efficiently, honestly and fairly and to anti-hawking obligations.

Section 12BAA of the Australian Securities and Investments Commission Act 2001 will be amended to expressly specify that funeral expenses policies are not exempt funeral benefits for the purposes of the Australian Securities and Investments Commission Act 2001.