Funeral Products – Session 2 Philippa Heir Senior Solicitor (Insurance) 18 April 2017 Consumer Action Law Centre Worker advice line: 9602 3326 Rural access: 1300 881 020 advice@consumeraction.org.au www.consumeraction.org.au

Welcome

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Learning Outcomes Identify systemic issues Identify the main funeral products and the pros and cons of each Identify and apply relevant Consumer Law Identify appropriate avenues for consumer complaints Advocate effectively for clients experiencing difficulty with contracts

Session overview Recap of Pre-webinar session Types of funeral products Systemic issues CentrePay – What has happened? Video case study: Decision-making Assisting your client Audio case Study: I’ve been paying premiums for years Seeking refunds: legal context Making a complaint Session review

Recap of Pre-webinar tasks Types of Funeral Products Funeral Insurance Pre-Paid Funeral Funeral Bond Other funeral payment alternatives Savings account Superannuation Department of Veterans' Affairs Centrelink

Recap of pre-webinar tasks – What does the Barefoot Investor think of funeral insurance?

Recap of Pre-webinar tasks Systemic issues ASIC Report 454: Funeral Insurance A Snapshot identified key issues: Rising premiums High cancellation rate (particularly by Indigenous consumers) Many very young Indigenous consumers signing up

Funeral Insurance and CentrePay

Video recap Age: 46 Occupation: Casual Labourer Income: $1,350 per fortnight

Quick break

Assisting your client

Case Study: “I’ve been paying premiums for years” Janet is concerned about increases in her funeral insurance premiums and has come to you for advice about her options. At your request, Janet’s insurer: sends you a recording of the initial sales call tells you that she has paid a total of $7,325.34 tells you her premiums are stepped and she also has inflation protection. Listen to the recording of the sales call What are Janet’s options? What arguments does she have to support a request for a premium refund? If the insurer refuses to provide a refund, what can she do?

Seeking refunds: legal context Misleading and deceptive conduct Unconscionable conduct Breach of duty of good faith Unsolicited sales legislation

Seeking refunds: legal context Misleading and deceptive conduct An insurer must not engage in conduct that is misleading or deceptive or that is likely to mislead or deceive. You must show that the consumer relied on the relevant statement in making his or her decision to take out the policy. Also see Life Insurance Code – must be clear and not misleading (from 1 July 2017)

Seeking refunds: legal context Unconscionable conduct Conduct may be unconscionable if it is particularly harsh or oppressive. Must be more than simply unfair—it must be against conscience as judged against the norms of society. Must show that the conduct influenced the consumer’s decision to take out policy. Also see Life Insurance Code promise – honest and fair (from 1 July 2017)

Seeking refunds: legal context Breach of duty of good faith Under Section 13 of the Insurance Contracts Act 1984 (Cth) - implied term of the contract is that both parties must act with utmost good faith. Utmost good faith is defined as acting with fairness and honesty *Note: Unfair contract terms legislation does not apply to insurance contracts

Seeking refunds: legal context Unsolicited sales - Financial Products General ban on unsolicited sales of financial products Telephone call may be exempt (see Practice Note for relevant factors) Consequences of breach Penalty provisions eg fines or even jail Might extend cooling-off for further month Might be relevant to unconscionable conduct

Financial hardship Insurers to comply with Life Insurance Code of Practice by 1 July 2017

Case Study: “I’ve been paying premiums for years” Janet is concerned about increases in her funeral insurance premiums and has come to you for advice about her options. At your request, Janet’s insurer: sends you a recording of the initial sales call tells you that she has paid a total of $7,325.34 tells you her premiums are stepped and she also has inflation protection. Listen to the recording of the sales call What are Janet’s options? What arguments does she have to support a request for a premium refund? If the insurer refuses to provide a refund, what can she do?

Case Study: “I’ve been paying premiums for years” Janet’s options Continue paying Cancel and cut her losses Negotiate terms eg. reduction in premiums or change from stepped to level premiums Request refund of premiums for breach of the law

Making a complaint Prepare IDR EDR Gather evidence Identify arguments Complaint to insurer If unsuccessful can progress to EDR EDR FOS Power to order remedies

Making a complaint Prepare Ask your client how they came to take out the product Eg. were they approached? Request copies of all communication btw insurer and client including call recordings Request copy of insurance schedule, policy wording and PDS Listen to recordings and read correspondence

Making a complaint Internal Dispute Resolution (IDR) Set out all the arguments/concerns in a letter to the insurer Insurer has 45 days to provide final response to complaint If unsuccessful at IDR or 45 days passes without response, the insured can complain to the Financial Ombudsman Service (FOS).

Making a complaint External Dispute Resolution (EDR) FOS has jurisdiction over life insurance Power to order remedies including the payment of money, rectification/re- instatement of contract, compensation Opportunities to resolve informally Must complain within 2 yrs of IDR response Must complain within 6 yrs of loss/when loss was reasonably apparent

Session review Types of funeral products – pros and cons Systemic issues Assisting your client Decision making Legal context for seeking refunds Options for making a complaint

Session review What’s the next session about? Any questions?

Call us! Consumer Action Law Centre Level 6, 179 Queen Street Melbourne VIC 3000 Worker Advice Line: (03) 9602 3326 Rural access: 1300 881 020 Mon – Fri 10am to 1pm and 2pm to 5pm Email: advice@consumeraction.org.au