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More transparency needed in funeral industry; new legislation needs to go further to protect consum

With the funeral industry’s growing focus on upselling bereaved families, we are happy to see the Province of Manitoba expects to introduce new legislation this fall to strengthen consumer protection rules around pre-arranged funerals (Province probes pre-arranged funerals, July 9, 2015 Winnipeg Free Press).

That is an important step forward, but we feel the legislation isn’t going far enough to reform the regulations that govern the industry.

One of the biggest problems facing the industry is its perceived lack of transparency. The costs associated with funerals have risen sharply in the last two decades. According to the National Funeral Directors Association in the United States, the median cost of a funeral in 2012 was just over $7,000 (USD), which was an increase of 35 per cent from five years before. Canadians face similar costs.

The price inflation has been caused by many things, but perhaps most importantly by a growing sales culture within the funeral industry. Some funeral homes earn sizable returns on commissions they charge.

It pays to upsell families to higher and higher quality caskets and urns and gravestones. In many cases, those commissions are hidden and undisclosed.

Too often, costs that are quoted up front end up being just a fraction of what the final bill will be. Families get swept up by sales pitches at an emotional time in their lives and can make expensive decisions that they may later regret.

Those rising costs have led to a new kind of funeral professional in North America: funeral planners. For a flat fee, planners coordinate funerals and cremations. They may or may not earn any other compensation.

Like fee-based financial planners, planners are typically not tied to one group of vendors. We can shop around and plan very unique services using any number of venues, caterers and suppliers.

In many cases, we can save families money because our bottom line doesn’t improve if you buy more complex and expensive services. It’s up to you what you want, and we can help you get it done.

The province is on the right track in trying to tighten up rules regarding the sales of pre-arranged funerals.

In most cases, however, frauds and other illegal or unsavoury business practices are only uncovered after complaints are lodged.

Here are five changes we believe the province should consider in the new legislation:

  • The Funeral Board of Manitoba should be encouraged to proactively police the industry by adopting a system of periodic spot audits of funeral homes in the province to ensure they are complying with legislation.

  • Ensure cemeteries are also bound by the same rules that cover pre-arranged funerals. Cemeteries are allowed to sell items related to a pre-arranged funeral without the requirement of putting the money in trust. Funeral homes with cemeteries can use this as a loophole in legislation.

  • Encourage more transparency by requiring all funeral homes to divulge all sources of remuneration. Families should know if their funeral home is earning revenue on the floral arrangements it’s ordering.

  • Give consumers 30 days (instead of the proposed 10) to change their minds and cancel a pre-arranged funeral contract.

  • Finally, we think the province should require funeral planners, like us, to be licensed by the Funeral Board of Manitoba. While our company is headed by a trained former funeral director, anyone can hang out a shingle and offer funeral planning services today. We believe anyone who does should have to follow certain business practices and a code of ethics.

Funerals are very important events in our society; because they are important, and because they happen when families are often highly emotional, we need to take steps to ensure we encourage the most ethical practices possible.

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