Whistleblowers urged to join funeral industry survey
Tom BurtonGovernment editor
Apr 6, 2021 – 1.24pm
Many years ago the living room was exactly that. When loved ones died they were brought to the sitting or parlour room for family and friends to commemorate their lives.
Those days are long gone and now when our closest die, typically in hospitals or palliative care homes, families are told to ring a funeral director.
InvoCare is the major operator in the $1.6 billion funeral industry, with a 25 per cent market share. Matt Hull
"And that is where the problem begins," said Sydney University professor Sandra van der Laan, who co-authored a seminal research paper on the Australian funeral industry in 2017.
"That is when people are at their most vulnerable – they don't know they have other choices.
"As far as I'm concerned, nothing's changed [since 2017]. People don't know what they can do – they get advice from the institution where the person dies, and that's the centre of the problem."
Families of someone who died in hospital were given a pamphlet telling them to ring a funeral director, "so your choices have already been constrained at that point", Professor van der Laan said.
"As soon as you ring a funeral director you're buying a package – you're buying a whole bunch of things, including disposing of the body, which is the only thing that you actually have to do legally.
"The consumer loses control right from pretty much the beginning because they are vulnerable."
Continued customer complaints about the industry have prompted the Australian Competition and Consumer Commission to initiate yet another regulatory review.
Consumers at a disadvantage
"Competition and consumer issues in the funeral services sector have long provoked complaints from the public, governments and generated stories in the media," ACCC commissioner Rod Sims said when announcing the sector would be one of the ACCC's priority focuses in 2021.
Many consumers engaged with the funeral sector at a time when they were grieving, vulnerable and thereby at a disadvantage, Mr Sims said.
"There is growing criticism about the lack of price transparency for funeral services and the difficulties consumers face in making an informed decision," he said.
"There are also complaints from consumers about misleading and deceptive practices in the sector.
"These include hidden fees, add-on services not included and misrepresentations about what will be covered. Additionally there are allegations of unfair contract terms within funeral service and pre-paid funeral contracts."
The ACCC has launched an online survey of consumer experiences when arranging funerals, and input from people who work in the industry.
"There have been reports from people within the sector of anti-competitive conduct such as misuse of market power and exclusive dealing," Mr Sims said.
"We strongly encourage whistleblowers to come forward."
Mr Sims said the industry was "a concentrated sector with some players having significant market power".
"As some funeral service providers also have a large share of different services across the funeral home, cemetery and crematoria markets, there is an opportunity for these providers to bundle services and block new entrants to the market."
Listed funeral services provider InvoCare dominates the sector, with annual Australian revenue of $406 million in calendar 2020, giving it a 25 per cent share of a sector that IBIS has estimated had total annual revenue of $1.6 billion in the same period.
InvoCare operates brands across the full spectrum of services from basic to premium offerings. Its brands include White Lady Funerals and Simplicity Funerals. Amid tight COVID-19 restrictions, InvoCare slid to a loss of $9.2 million for the 12 months ended December 31.
In a statement, InvoCare said it welcomed the opportunity to engage with the ACCC on its review.
"As a leader in the Australian funeral service and memorialisation sector, InvoCare is supportive of ensuring appropriate standards apply across the industry and that customers are treated fairly and with respect."
The Australian Funeral Director Association covers about two-thirds of the industry and operates a self-regulatory code for its members.
"Because you only get one chance for a funeral and it's such a big impact on people's lives, it's important that consumers can be confident of the business that they're dealing with. And second, that that business has a certain level of transparency," AFDA president Adrian Barrett said.
"What I'd like to see, and the association would like to see, is greater transparency.
"As an association we don't have an issue with the amount of the fees that are charged. It's more the transparency behind that so they [consumers] can understand the basis of that pricing."
Tom Burton has held senior editorial and publishing roles with The Mandarin, The Sydney Morning Herald and as Canberra bureau chief for The Australian Financial Review. He has won three Walkley awards. Connect with Tom on Twitter. Email Tom at tom.burton@afr.com
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