Fair Trading (Pre-paid Funerals Industry Code) Regulations 2011

The code defines several key terms that structure its operation.

A “pre-paid funeral contract” is a contract entered into during the life of the recipient (the person whose funeral is to be arranged) between a “client” (who may be the recipient or another person) and a “funeral director” (a person or body carrying on the business of providing funeral services), under which the funeral director agrees to arrange a funeral that is to be wholly or partly paid for on the making of the contract. This definition captures both fully pre-paid and partly pre-paid arrangements, but only those entered into before death. Contracts made after death (e.g., with the estate) are outside the code.

An “approved investment” is a bond, endowment policy, or other similar form of investment whose terms prevent realisation except on production of either a death certificate relating to the recipient or a duly signed notice of cancellation of the pre-paid funeral contract. This restriction ensures that the investment cannot be prematurely liquidated, preserving the funds for the intended funeral or, upon cancellation, for distribution according to the contract’s terms. The investment must be held in a form that meets this restriction. Not all investment products qualify; only those with these specific lock-in features are permitted.

An “approved investment manager” is a narrow class of entities: a body corporate carrying on life insurance business under the Life Insurance Act 1995 (Cth), a friendly society, a licensed trustee company under Chapter 5D of the Corporations Act 2001 (Cth), the Public Trustee, the Catholic Church Endowment Society Incorporated, or any other body that carries on the business of investing money on behalf of others and is approved by the Commissioner for Consumer Affairs (who must be satisfied that the body has adequate insurance cover for all money received in relation to a pre-paid funeral). This list excludes many mainstream investment institutions such as banks (unless they also fall under one of the categories, e.g., as a trustee company) and retail investment platforms. The requirement for Commissioner approval for bodies outside the listed categories creates a gatekeeping function that can limit market entry and reduce consumer choice, though it also aims to ensure only entities with adequate insurance hold consumer funds.

The code distinguishes between the “client” (the person who enters into the contract) and the “recipient” (the person whose funeral is to be arranged). These may be the same person (where someone contracts for their own funeral) or different (where a family member or other person contracts on behalf of a recipient). In the latter case, additional disclosure obligations arise: the contract must state the names and residential addresses of both client and recipient, and the funeral director must verify the authority of the client to enter the contract if the recipient lacks legal capacity (clause 3(2)). This provision addresses the common scenario where a recipient is elderly or incapacitated and a relative or guardian arranges the pre-paid funeral.

The code’s status as a prescribed industry code under Part 3A of the Fair Trading Act 1987 means that a breach of its provisions is automatically a contravention of section 28E of that Act, which in turn triggers the civil penalty regime in Part 7 Division 3A. The Commissioner for Consumer Affairs is responsible for administration of the code (regulation 2A(2)). The expiation fee for most breaches is $500, but breaches of clause 3(2) cannot be dealt with by expiation notice; such breaches must be pursued through court proceedings, exposing the funeral director to potentially higher penalties and reputational damage.

The regulations directly affect three categories of persons: funeral directors, approved investment managers, and clients/recipients. Indirectly, they also affect the Commissioner for Consumer Affairs, the courts, and the broader funeral industry.

Funeral directors in South Australia who offer pre-paid funeral contracts are the primary regulated parties. They must comply with the detailed contract content requirements, the seven-day transfer obligation, the notice to the investment manager, and the verification requirements when a recipient lacks legal capacity. Any funeral director who operates in South Australia but is based elsewhere also falls within scope if they enter into contracts for funerals to be performed in the state. The compliance burden is particularly heavy for small independent funeral directors who may lack legal and administrative resources to draft compliant contracts, track transfer deadlines, and manage relationships with approved investment managers. Larger chains may have in-house compliance teams, but the cost of compliance is ultimately borne by the business and may reduce the competitiveness of smaller players.

Approved investment managers are required to accept funds from funeral directors, invest them in approved investments within 28 days, and issue detailed written notices to both the client and the funeral director. Entities that qualify as approved investment managers under the code (life insurers, friendly societies, licensed trustee companies, the Public Trustee, the Catholic Church Endowment Society, and Commissioner-approved bodies) must decide whether to offer products that meet the approved investment criteria. This is a commercial decision; some entities may choose not to participate due to the administrative burden or the restriction on fund realisation. The code effectively creates a captive market for these managers, but with associated compliance costs and potential litigation risk if they fail to comply.

Clients (the persons who enter into pre-paid funeral contracts) are the intended beneficiaries of the consumer protections. They receive detailed information about the funeral arrangements, costs, and cancellation terms, and their funds are directed to an approved investment manager rather than being held by the funeral director. However, clients also bear the cost of compliance through higher fees or reduced investment returns, and they must rely on the accuracy and completeness of the contract documentation. The mandatory note about taxation and social security implications of cancellation places a burden on the client to seek independent advice; the code does not require the funeral director to provide that advice.

Recipients (the persons whose funerals are arranged) are affected primarily indirectly, but clauses relating to lack of legal capacity directly concern recipients who cannot consent. The verification requirements in clause 3(2) aim to protect vulnerable recipients from improper contracts.

The Commissioner for Consumer Affairs is responsible for administration of the code (regulation 2A(2)). This includes approving alternative investment managers under the code, investigating alleged breaches, issuing expiation notices, and potentially commencing civil penalty proceedings for serious breaches such as clause 3(2) violations. The Commissioner must also maintain oversight of industry practices and may issue guidelines or take enforcement action.

The small number of funeral directors and investment managers in South Australia means that the code affects a relatively small population of businesses, but the stakes are high given the emotional and financial significance of funeral arrangements for consumers.

The code imposes clear duties on funeral directors and approved investment managers, but confers only limited express rights on clients; most client rights derive from the contract terms that the code mandates.

Funeral directors have the duty to ensure pre-paid funeral contracts are in writing, in print size no less than 12 points, and signed by all parties (clause 3(1)). They must include the exhaustive list of particulars set out in clauses 3(3) to 3(5). This includes not only the basic details of the parties and the funeral director’s and investment manager’s contact information, but also technical details such as the type and style of coffin or container (including materials, linings, fittings, mountings), details of interment rights (holder, cemetery authority, period, location), and any separate pre-paid memorial arrangements. The cost must be itemised: total cost, costs for each matter under clause 3(4), costs for documentary materials, transportation charges and when they apply, and any amount retained for pre-death expenses.

A particularly important duty relates to cancellation rights (clause 3(5)(g)). If the contract provides for cancellation (which is not mandatory, but if it does, the code regulates it), the contract must state who may cancel, how, the financial arrangements including notice period required for withdrawal of funds from the approved investment manager, and the mandatory note about taxation and social security implications. The code does not mandate a cooling-off period; it merely requires disclosure if cancellation is available. A funeral director could theoretically offer a no-cancellation contract, though such a term would likely deter consumers.

The funeral director must also include a note advising clients to ensure the recipient’s next-of-kin and executor are aware of the contract (clause 3(5)(h)).

Upon execution, the funeral director must give a signed copy to all parties (clause 3(6)).

Within seven days of receiving money (other than amounts retained for pre-death expenses under clause 3(5)(e)), the funeral director must transfer the money to the approved investment manager and give that manager a written notice setting out the contract provisions relating to cessation of business (clause 3(5)(f)) and cancellation (clause 3(5)(g)(i), (ii), (iii)). This is a strict deadline; even one day’s delay constitutes a breach. The amount retained for pre-death expenses is not defined further, creating ambiguity about what qualifies (e.g., costs of purchasing an interment right, fees for administrative work). Funeral directors must exercise judgment, and any improper retention could be a breach.

Approved investment managers must, within 28 days of receiving money from a funeral director, (a) invest the money in an approved investment, and (b) give the client and funeral director a written notice specifying eight items: the funeral director’s name; the client’s name; the recipient’s name (if different); the investment manager’s name; the amount received; the amount paid for initial management expenses and commission to the manager or any other person; the amount invested; and particulars of the form of the approved investment. This notice gives clients visibility into how much of their money is consumed by fees and commission, though it does not require ongoing reporting of investment performance.

Clients have the right to receive the contract and the investment notice, and to enforce the contract terms against the funeral director and possibly the investment manager under contract law, but the code does not create a statutory cause of action for clients. Enforcement is through the Fair Trading Act’s civil penalty regime, which is exercised by the Commissioner, not private litigants. This means clients cannot directly sue for breach of the code (though they may have contractual remedies).

The duties are strict; there is no reasonable endeavours or best efforts qualifier. This reduces discretion but can be harsh in practice. For example, if a funeral director receives money on a Friday and the bank takes two business days to clear a transfer, the seven-day window may be tight.

The enforcement framework rests on the Fair Trading Act 1987. Regulation 2A prescribes the code as an industry code under Part 3A of the Act. Regulation 3(1) states that a contravention of section 28E of the Act constituted of a contravention of the code is subject to a civil penalty under Part 7 Division 3A. This means that any breach of the code triggers the civil penalty provisions of the Act, which may result in court-ordered pecuniary penalties, injunctions, or other orders.

The regulations set an expiation fee of $500 for an alleged civil penalty contravention involving an alleged contravention or attempted contravention of the code, other than a breach of clause 3(2) (regulation 3(2)). The expiation fee operates as an on-the-spot penalty; a person served with an expiation notice can pay the fee and have the matter finalised without court proceedings. The exclusion of clause 3(2) (verification of recipient’s lack of legal capacity) means breaches of that clause cannot be resolved by expiation; they must be pursued through formal proceedings, which carry the risk of higher penalties and adverse findings.

The $500 figure is relatively low compared to the potential value of a pre-paid funeral contract (often several thousand dollars). For a funeral director, the expiation fee may be seen as a cost of doing business if compliance is lax. However, repeated breaches could lead to escalating enforcement action, including court proceedings seeking penalties of up to $10,000 or more (depending on the Fair Trading Act’s maximum civil penalty at the time). The Commissioner has discretion to issue expiation notices, accept enforceable undertakings, or seek court orders.

There is no criminal sanction attached to the code; the breach is a civil penalty contravention only. This means the standard of proof is the civil standard (balance of probabilities) rather than beyond reasonable doubt, making it easier for the Commissioner to prove breaches.

The enforcement burden falls on the Commissioner for Consumer Affairs, who is responsible for administration. The Commissioner may conduct investigations, require production of documents, and issue infringement notices. However, given the small size of the industry in South Australia and limited resources, enforcement may be sporadic. The code relies heavily on self-reporting and consumer complaints to trigger action.

Crucially, clients themselves have no direct private right of action for breach of the code. Their remedies remain contractual; if the funeral director breaches the code, the client can sue for breach of contract (if the contract incorporates the code’s terms) or for misleading conduct under the Australian Consumer Law (if the director misrepresents their compliance). The civil penalty regime is a public enforcement tool, not a private redress mechanism.

The code operates within a broader legal framework. It is made under the Fair Trading Act 1987 (SA) and is expressly prescribed as an industry code under Part 3A of that Act. The Fair Trading Act provides the enforcement machinery, including civil penalty provisions and powers of the Commissioner.

The code also interacts with Commonwealth legislation. The definition of “approved investment manager” includes bodies carrying on life insurance business under the Life Insurance Act 1995 (Cth) and licensed trustee companies under Chapter 5D of the Corporations Act 2001 (Cth). Investments held by such entities are subject to their respective regulatory regimes, including capital adequacy, disclosure, and conduct obligations. For example, a life insurance company that issues an endowment policy for pre-paid funeral costs must comply with the Life Insurance Act’s requirements regarding policy terms, solvency, and policyholder protection.

The Australian Securities and Investments Commission Act 2001 (Cth) and the Australian Consumer Law (which is applied as a law of South Australia through the Fair Trading Act) may also apply. The code’s disclosure requirements overlap with the general prohibition on misleading or deceptive conduct. A funeral director who fails to comply with the code may also breach section 18 of the Australian Consumer Law if the non-compliance misleads consumers about their rights.

The note in the contract about taxation and social security implications of cancellation (required by clause 3(5)(g)(iv)) highlights potential interactions with the Income Tax Assessment Act 1997 (Cth) and the Social Security Act 1991 (Cth). Cancelling a pre-paid funeral contract may trigger capital gains tax consequences or affect aged care means testing, but the code does not require the funeral director to give advice; it merely requires a warning note.

The Small Business Commissioner Act 2011 (SA) is relevant. Regulation 2A(2) contains a note stating that under clause 37(2) of Schedule 1 of that Act, the code is taken to have been prescribed as an industry code. This suggests some interaction with the small business commissioner’s role, possibly in dispute resolution or advocacy, though the code itself does not detail that.

The code does not override the general law of contract. A pre-paid funeral contract remains a valid contract subject to ordinary principles of formation, consideration, and remedies. The code adds mandatory content and procedural requirements but does not displace contractual rights. If a contract fails to include a required term, that term may be implied by statute or the contract may be voidable, depending on the Fair Trading Act’s provisions. The code does not expressly state consequences of non-compliance with individual content requirements.

State laws regarding burial and cremation, cemetery management, and funeral directing (such as the Burial and Cremation Act 2013 (SA)) continue to apply alongside the code. The code’s requirement to specify cemetery and interment rights coordinates with those laws but does not replace them.

The regulations were originally made on 11 August 2011 and commenced on 1 September 2011 as the Fair Trading (Pre-paid Funerals Industry Code) Regulations 2011. They revoked the earlier Fair Trading (Pre-paid Funerals Code of Practice) Regulations 1996. The 2011 version presumably set out the code in a similar form, but the legislative history shows that amendments were made by regulation 15 of 2012, gazetted on 15 March 2012 and commencing on 22 March 2012.

The 2012 amendment varied the short title (regulation 1), substituted regulation 2 (interpretation) entirely, inserted a new regulation 2A (prescription of code), substituted regulation 3 (contravention of code subject to civil penalty), substituted the heading of Schedule 1, varied clause 1 of the code (short title), and omitted Schedule 2 under the Legislation Revision and Publication Act 2002. The original Schedule 2 is not reproduced in the current version and its content is unknown; it may have contained transitional provisions, forms, or other matter that was no longer needed after the amendment.

The insertion of regulation 2A clarified that the code is prescribed as an industry code under Part 3A of the Fair Trading Act and that the Commissioner for Consumer Affairs is responsible for administration. This formalised the code’s legal basis. The substitution of regulation 3 refined the civil penalty and expiation provisions, including the explicit exclusion of clause 3(2) of the code from expiability.

The title of the code in Schedule 1 was changed from “Pre-paid Funerals Industry Code 2011” to “Pre-paid Funerals Industry Code 2011” (the same title, but the heading was varied to reflect the new title). The short title clause was also varied.

The amendments were made relatively soon after the original making, suggesting that the initial drafting required refinements to ensure clarity and effective enforcement. There have been no subsequent amendments as of the latest legislative history shown (the source does not indicate later changes, and the history notes “New entries appear in bold” and only shows entries up to 2012). The regulations remain in force as at the time of the source document.

The 1996 regulations that were revoked had governed pre-paid funerals under a code of practice framework. The 2011 regulation replaced that with the industry code regime under Part 3A, which gave the code greater legal force (civil penalties rather than just a code of practice with limited enforcement). This was a significant strengthening of consumer protection, but also increased the regulatory burden on funeral directors.

The source document provides no information about litigation under these regulations. It does not cite any cases, and there are no references to court proceedings in the text. Given that the regulations are relatively minor and specific to South Australia, there is limited public litigation history. The civil penalty regime is designed to be enforced by the Commissioner for Consumer Affairs rather than through private litigation, so reported cases are likely rare.

Potential areas of dispute could include: whether a particular investment qualifies as an “approved investment” under the code; whether a funeral director has complied with the seven-day transfer requirement; whether a contract fails to include required particulars; or whether a client had authority to act for a recipient lacking capacity. These disputes would typically be resolved by the Commissioner issuing an expiation notice or by the South Australian Civil and Administrative Tribunal (SACAT) or the District Court on appeal.

No judgment from SACAT or the Supreme Court of South Australia relating specifically to these regulations is readily available in the source. The regulations’ focus on technical compliance and the modest expiation fee ($500) may mean that most breaches are dealt with administratively rather than litigated.

However, for a complete picture, practitioners should search the South Australian judgments database for any decisions interpreting the code. The absence of cited cases in the instrument does not mean there have been no proceedings; merely that the source does not mention them.

Several practical traps arise from the code’s detail and strict deadlines.

First, the seven-day transfer obligation (clause 3(7)) is absolute. If a funeral director receives money on a public holiday or weekend, the clock starts immediately. Banking delays, administrative errors, or illness can cause a breach. There is no grace period or force majeure exception. A funeral director who holds client funds for eight days, even unintentionally, is in breach and can be served with an expiation notice or face civil penalty proceedings.

Second, clause 3(2) regarding verification of a recipient’s lack of legal capacity is a trap because it cannot be resolved by paying an expiation fee. If a funeral director enters into a contract with a client on behalf of a recipient who appears to lack capacity, the director must either sight a power of attorney or guardianship order authorising the client to act, or if no such authority exists, take “reasonable steps” to verify the recipient’s lack of legal capacity. The code does not define “reasonable steps”. This creates legal uncertainty; what is reasonable will depend on the circumstances. Failure to comply means the breach must go to court, exposing the director to higher penalties and adverse publicity.

Third, the contract content requirements are exhaustive and technical. For example, clause 3(4)(a)(iv) requires the type and style of coffin or other container, the materials of which it is made, and details of linings, fittings, and mountings. A contract that omits the material of the linings (e.g., “satin” v “polyester”) may be non-compliant. Similarly, interment rights require the “period for which the interment right was granted” and “the nature and location of the interment site”. These details may not be known at contract formation if the cemetery has not yet allocated a specific site. The contract must either specify them or risk breach.

Fourth, the requirement for a note in bold type about tax and social security implications (clause 3(5)(g)(iv)) does not impose any duty on the funeral director to advise; it merely warns the client to seek advice. However, if the note is omitted, even if the client was otherwise aware, the contract is non-compliant. The note must be in bold type; a regular font note may be insufficient. This is a formal requirement that is easy to overlook.

Fifth, the code does not require the funeral director to update beneficiaries or investment managers if the contract details change (e.g., change of address, change of funeral preferences). Clients may assume they can modify the contract later, but the code imposes no obligation on the funeral director to accept changes or notify the investment manager of changes. The contract may become outdated and potentially unenforceable.

Sixth, the definition of “pre-paid funeral contract” includes contracts that are “wholly or partly paid for on the making of the contract”. This means a contract paid in instalments may be covered only if the first payment is made at formation. If a contract is signed but no payment is made until later, it may not trigger the code’s obligations until money is received. However, the contract form must still comply from the outset. The interaction between payment timing and contract formation is unclear.

Seventh, the code does not address what happens if the approved investment manager becomes insolvent or ceases business. The client’s funds are held by that manager, and while the investment is locked until death or cancellation, there is no backup mechanism. The client may be an unsecured creditor of the investment manager, subject to any statutory protection under the Life Insurance Act or Corporations Act. The code does not require insurance or guarantee beyond the Commissioner’s initial satisfaction at approval.

Eighth, the expiation fee of $500 may be seen as low relative to the potential value of a contract, but it does not preclude the Commissioner from seeking a higher court-imposed penalty for the same breach if it is serious or repeated. The Commissioner can choose to issue an expiation notice or go directly to court. A funeral director who pays an expiation fee for one breach may still face court proceedings for another.

Compliance with the code requires systematic attention to contract drafting, money handling, and record-keeping.

For funeral directors, the first step is to ensure a standard form contract that satisfies all content requirements of clause 3(3), (4), and (5). The contract must be in writing, print size at least 12 points, and include all mandatory particulars: date; funeral director’s name, business address, and telephone number; approved investment manager’s name, business address, and telephone number; client’s name and residential address; if different, recipient’s name and residential address; contact person(s); funeral service details (location, manner of disposal, interment details if applicable, coffin specifications, urn details, interment rights, separate memorial contract details); associated matters (florals, notices, coaches, service celebrant, memorial work); any other requirements; total cost and itemised costs; documentary material charges; transport charges and circumstances; amounts retained for pre-death expenses; arrangements if funeral director ceases business or cannot perform; cancellation rights (if any) including who can cancel, how, financial arrangements, notice period for fund withdrawal, and the two mandatory notes in bold type (tax/social security implications and notification to next-of-kin/executor).

The contract must be signed by all parties. If the recipient lacks legal capacity, the funeral director must either sight the relevant authority (power of attorney, guardianship order) or take reasonable steps to verify that lack of capacity and document those steps. It is prudent to keep copies of any documents sighted and a written record of verification steps.

Upon signing, a signed copy must be given to all parties immediately (clause 3(6)). The funeral director should retain a copy for their records.

Money received must be handled carefully. The funeral director may retain amounts for pre-death expenses (e.g., interment right fees) but must document the basis for retention. All other money must be transferred to the approved investment manager within seven days of receipt. This requires setting up efficient banking arrangements, possibly using direct transfers to meet the deadline. The funeral director should keep records of receipt dates and transfer dates. If a weekend or public holiday intervenes, the director should send the transfer on the next business day that falls within the seven-day window; but to be safe, best practice is to transfer within two to three business days.

Within seven days of receiving money, the funeral director must give the approved investment manager a written notice setting out the contract provisions relating to cessation of business (clause 3(5)(f)) and cancellation (clause 3(5)(g)(i), (ii), (iii)). This notice should include the relevant clauses of the contract. It is advisable to have a standard form notice pre-prepared.

For approved investment managers, compliance requires prompt action within 28 days of receiving money. The manager must invest the money in an approved investment (a bond, endowment policy, or similar instrument meeting the non-realisability criteria). Failure to do so within 28 days is a breach. The manager must also prepare and send a written notice to the client and funeral director specifying the eight items listed in clause 4(b): names, amounts received, expenses and commissions, amount invested, and particulars of the approved investment. The notice should be sent by a reliable method with proof of delivery.

Both funeral directors and approved investment managers should maintain registers of pre-paid funeral contracts, money received, and notices sent. Regularly auditing compliance with timeframes can prevent inadvertent breaches. Training staff on the code’s requirements is essential, particularly for reception staff who handle money and contract documents.

Finally, staying informed of any amendments or Commissioner guidance is important. While the code has not been amended since 2012, the Commissioner for Consumer Affairs may publish guidelines or industry bulletins clarifying compliance expectations. Engaging legal advice when drafting contracts or handling complex cases (such as recipients lacking capacity) is strongly recommended.