The funeral parlour industry has welcomed the decision to review laws governing the sector, saying many service providers are corrupt and rip off people. (Photo by Per-Anders Pettersson/Getty Images)
The funeral parlour industry has welcomed the decision to review laws governing the sector, saying many service providers are corrupt and rip off people.
The review will be done by the South African Reserve Bank’s Prudential Authority and the Financial Services Sector Conduct Authority (FSCA).
National Funeral Directors Association chairperson Johan Rousseau said the industry’s 75 000 funeral businesses, most of which are unregistered, are not adequately policed.
About 36 pieces of legislation regulate the industry under various laws including the Health Act, the Financial Advisory and Intermediary Services Act, the Insurance Act and the Basic Conditions of Employment Act.
“We have continuously said, let’s have a regulating authority which could engage with all the stakeholders, not to close guys down [but] to provide the necessary standards and the guidelines,” Rousseau said.
The FSCA and Prudential Authority said in their statement that representatives of the funeral parlour market had “ individually and collectively raised a number of concerns to the authorities and the NT [national treasury] around potential issues in the current regulatory framework that may be hampering the ability of the market to achieve meaningful long-term growth and effectively serve its historically underserved customer base”.
Among the concerns the authorities raised was that the group funeral policy structure had resulted in “some funeral parlours transferring books of business between insurers, without the knowledge and consent of their clients and often contrary to the best interests of such clients”.
the FSCA and PA said they were aware of “a high number of unlicensed entities, including funeral parlours, that are engaged in the self-underwriting of insurance policies and unauthorised collection of ‘premiums’ from their clients”.
“These practices expose customers to various risks, including uncertainty around the availability of funds and operational ability to have the full value of their claims settled in line with their expectations, as and when required.”
This also exacerbated the emotional distress experienced by families unable to bury their loved ones in a timely and dignified way.
Rousseau said he was aware of a case where a funeral parlour owner in the Eastern Cape had collected R7 million in “insurance premiums” from customers without paying the money to an insurance company. He then closed his business and walked away with the money.
In other instances funeral parlours collected premiums from customers but paid only a portion of the money to insurers to buy cover, and pocketed the balance.
He added that long delays in receiving insurance payouts, or where a dispute or consumer complaint is filed with the FAIS ombudsman, resulted in families turning to mashonisas who charged interest rates of at least 30% a year to fund funerals for their loved ones. In some cases, funeral parlours also act as loan sharks.
The FSCA and PA said the review would include training and awareness workshops to help unlicensed parlours become authorised financial service providers, and to improve consumers’ financial literacy, as well as an understanding of funeral insurance so they deal only with legitimate service providers.
Stakeholder workshops will be held during the first half of 2025.
Rosseau called for an industry ombudsman to handle consumer complaints – currently the FSCA and FAIS ombudsman handle complaints – and for a regulator to enforce all aspects of the law regarding operating a funeral parlour business.
Pheko Methola, founder of the Progressive Funeral Practitioners Association of South Africa, said there are also problems with some funeral associations that stop emerging parlours from growing their businesses.
He said members of these associations were influencing home affairs officials to prevent them from giving registration numbers to new businesses.
“They are [also] influencing government hospital staff to block small, emerging funeral parlours from getting the deceased persons from the hospitals,” Methola said.
“It’s the big associations, they are now trying to prevent the small ones from conducting funerals, influencing Home Affairs, to not allow them to write exams to get their technician numbers (to be registered), and by influencing the guys who are working at the government not to give the smaller undertakers bodies. Meanwhile, they are paying for those bodies.
“Big funeral parlours are bribing the staff in the mortuaries at the government. They are even bribing the ambulance guys,” he said.
He said paramedics would advise families that they would take the deceased body to a “recommended” funeral parlour.
He added that it was unclear how unlicensed parlours were operating. “Those people [parlours] are not even registered with home affairs. The question is now, how do they register their deceased persons, and how do they conduct funerals?”
The Democratic Alliance’s Gauteng spokesperson for health, Madeleine Hicklin, was prevented from conducting an oversight inspection at the Hillbrow mortuary on Monday. Hicklin said she had gone there after receiving complaints regarding the conditions in which bodies are kept at the mortuary.
“According to a whistleblower, Occupational Health and Safety regulations are not being followed. Drains are clogged and there is blood all over the floor, which attracts rats that can eat the decomposing flesh off bodies,” Hicklin said.
She said a woman had recently approached the DA after a nearly two-year delay in burying her loved one because of a mix-up at a state mortuary in Soshanguve. “The body had not been kept at the proper temperature, necessitating DNA extraction from the teeth to confirm the identity.”
Hicklin said the fact she was denied access to the Hillbrow mortuary raises concerns about the conditions in which forensic pathologists are forced to work. She said the DA would escalate the issue through the parliamentary portfolio committee on health.
The Gauteng health department had not commented by the time of publication.