The funeral home industry has welcomed the decision to review the laws governing the industry, saying many service providers are corrupt and defrauding people. (Photo by Per-Anders Pettersson/Getty Images)
The funeral home industry has welcomed the decision to review the laws governing the industry, saying many service providers are corrupt and defrauding people.
The review will be carried out by the South African Reserve Bank's Prudential Oversight Authority and the Financial Services Sector Conduct Authority (FSCA).
Johann Rousseau, president of the National Funeral Directors Association, said most of the industry's 75,000 funeral directors are unregistered and not properly regulated.
Approximately 36 laws regulate the industry under various laws, including the Health Act, the Financial Advice and Intermediary Services Act, the Insurance Act, and the Basic Conditions of Employment Act.
“We've continually said, let's have a regulator that can work with all stakeholders, rather than shut them down.” [but] “It's about providing the necessary standards and guidelines,” Rousseau said.
In a statement, the FSCA and Prudential Authority said representatives from the funeral home market had “individually and collectively raised a number of concerns with the Authority and the Northern Territory”. [national treasury] potential challenges in the current regulatory framework that could hinder the market's ability to achieve meaningful long-term growth and effectively serve a historically underserved customer base; We are working on this. ”
One of the concerns raised by the agency is that the policy structure for group funerals “allows some funeral homes to transfer books of business between insurance companies without the customers' knowledge and consent, often against the best interests of their customers.” ” It was said that there were consequences.
The FSCA and PA said they were aware of “a number of unauthorized entities, including funeral homes, that engage in the self-underwriting of insurance policies and the fraudulent collection of 'premiums' from customers.”
“These practices expose our customers to a variety of risks, including uncertainty regarding the availability of funds and the ability of our operations to settle claims in full, if necessary and in accordance with expectations.”
This also exacerbated the psychological distress experienced by families who were unable to bury their loved ones in a timely and dignified manner.
Rousseau said he was aware of a case in which a funeral parlor operator in the Eastern Cape collected R7 million in “insurance premiums” from customers without paying the money to the insurance company. He then closed the shop and left with the money.
In some cases, funeral homes collected insurance premiums from customers, but paid only a portion of the premiums to the insurance company and kept the rest themselves.
He said if there is a long delay in receiving insurance benefits or if a dispute or consumer complaint is filed with the FAIS Ombudsman, families turn to Mashonisa, which charges interest rates of more than 30% a year to fund the funeral of a loved one. He added that this was the result. In some cases, funeral directors also act as loan sharks.
The FSCA and PA said the review will include supporting unlicensed parlors to become authorized financial service providers, improving consumers' financial literacy and ensuring they only deal with authorized service providers when it comes to funeral insurance. This will include training and awareness workshops to improve understanding.
A stakeholder workshop will be held in the first half of 2025.
Mr Rosseau called for an industry ombudsman to handle consumer complaints (currently the FSCA and FAIS ombudsmen handle complaints) and regulators to enforce all aspects of the law regarding the operation of funeral home businesses. Ta.
Pheko Metola, founder of the Progressive Funeral Directors Association of South Africa, said there were also problems within some funeral associations, which were hindering business growth for emerging parlors.
He said members of these associations were exerting influence on home affairs authorities to prevent new businesses from being given registration numbers.
“they are [also] “It's influencing government hospital officials to prevent emerging small funeral parlors from picking up dead people from hospitals,” Mesora said.
“It's a big association and they are now trying to prevent smaller associations from holding funerals. They are trying to influence the Home Office to allow them to write the exam to get the technician number (to register). By not letting them and by influencing the people who work there, the government deprives small funeral homes of organizations while they pay for the bodies.
“Big funeral companies are bribing government mortuary staff. They are also bribing ambulance personnel,” he said.
He said paramedics would advise the family to transport the body to a “recommended” funeral home.
It is unclear how unlicensed parlors operate, it added. “Those people [parlours] It is not even registered with the Ministry of Home Affairs. The problem is how to register the deceased and how to conduct the funeral. ”
Democratic Alliance Gauteng health spokesperson Madeleine Hicklin was prevented from conducting a surveillance inspection at Hillbrow Mortuary on Monday. Hicklin said he went there after receiving complaints about the conditions in which bodies were stored at the morgue.
“According to whistleblowers, occupational safety and health regulations are not being complied with. Drains are clogged, there is blood on the floor, and rats gather to eat the rotting flesh of corpses.” Hicklin said.
He said a woman recently approached the public prosecutor's office for advice after her loved one's burial was delayed for nearly two years due to a mistake at the state mortuary in Soshanguve. “Because the body was not kept at the proper temperature, DNA had to be extracted from the teeth to confirm the identity.”
Ms Hicklin said the fact that she was refused access to Hillbrow Mortuary raises concerns about the conditions in which forensic pathologists are forced to work. He said the DA would escalate the matter through Parliament's portfolio committee on health.
The Gauteng Department of Health had not commented at the time of publication.
