2 N.L. funeral homes with suspended licences still offer prepaid services to new clients

Two Newfoundland funeral homes that had theirlicencesfor prepaid funerals suspended two years ago still appear to be accepting money from new clients for these services.

An undercoverCBCNews investigation has found that Sunset Memorial Funeral Home in Grand Falls-Windsor said it would take money in trust for prepaid services, while GordonWoolfreyFuneral Home inLewisportesaid it would accept money in trust or through insurance.

A Sunset Memorial employee explained how it works over the phone.

"What happens is obviously a person would come in and select the funeral of their choice, the services and things like that," the employee said.

"And what happens is then, basically you have a couple of different options in regards with the payments, that sort of thing. What happens is the funeral is paid in full, that price is obviously locked in and money goes into a trust account, and obviously there would be no further payments then."

A GordonWoolfreyFuneral Home employee described the processthere.

"Usually how a pre-arrangement works is somebody pays their funeral say if somebody pays for their funeral today, then your price is guaranteed," the employee said.

"Say if you pass away 10 years down the road, and the price of funerals goes up, but you've already paid it now, then it doesn't make a difference. Whatever you pay today is what your funeral will cost then. That's usually how it goes. Money is usually put in trust or into an insurance, whichever way the family would prefer, until the time of passing."

When later contacted byCBCNews, Terry Green who owns both funeral homes declined to comment about prepaid funeral services.

"I should basically concentrate on what we do best that's serve families," he toldCBCNews.

During the undercover investigation, athird funeral home initially said money from new customers would be put into trust, before later saying that informationwas incorrect.

Service NL the provincial department in charge of the industry declined to make anyone available for an interview. The department instead responded to questions via email.

"The funeral homes [with suspendedlicences] are not permitted to take money in trust," the email stated.

5 businesses with suspended prepaidlicences

In total,there are five businesses on the island whose prepaid funerallicenceshave been suspended. The others areBotwoodFuneral Home (which is also owned by Green), Serenity Funeral Home in Burin Bay Arm, andOram's Funeral Home inGlovertown.

Documents obtained through access to information show that the provincial government suspended thelicencesin April 2016because the businesses failed to provide audits for multiple years. One later provided those documents, but the auditor could not say whether the home complied with the act after examining them.

While the businesses are not licensed to provide prepaid funeral services to new clients, the documents note they are allowed to honour previous prepaid agreements.

There is no indication in the government documents that clients have complained about not getting services that they had paid for.

The department also said it continues to work with funeral homes to help them become compliant with the legislation, so that their suspensions can be lifted.

"Currently, there are two funeral home owners that are actively working toward having theirlicencesreinstated," the email reads, but doesn't name the businesses.

Service NL toldCBCNews it monitors how funeral homes conduct their business, and said it will investigate any potential violations of the Prepaid Funeral Services Act or regulations.

Using insurance agents

DuringCBC's undercover investigation, employees for the other businesses said customers can make "pre-arrangements" or "pre-plan" their funeral services, and pay for it now through policies purchased from an insurance agent.

"They put your money in, and that way your money's guaranteed for the rate of inflation and everything," said a worker for Serenity Funeral Home.

Owner RexBlundonwas not available for an interview, but his wife, LorraineBlundon, said they sell pre-planned funerals, and use agents with Purple Shield insurance to handle the financial aspect.

"Really, it's the client's choice And to pre-arrange, you don't have to financially exchange any money," she said.

LorraineBlundonlater clarified through email: "Our clients are contacted by a licensed agent who sells them insurance, not any employee of the funeral home."

Meanwhile, during the undercover investigation, a worker forOram'sFuneral Home said they accept money in trust.

When later asked for comment, owner PaulOram, who's a former provincial cabinet minister, said the employee his mother had gotten it wrong.

• 'Followed everything to a T': Former N.L. cabinet minister defends funeral home operations

He saidOram'shasn't done prepaid funerals in years, and instead steers clients to an insurance agent, so the money doesn't go through his funeral home business.

Oram's Funeral Home's business manager, Pam Burry, further clarified the process via email.

"If a family decides that they would like to prepay their funeral, then they are to see an insurance representative that offers this type of service as we no longer offer this service," Burry writes.

"Oftentimes, we are listed as the funeral home service provider or beneficiary on these policies."

Those two businesses say they're not breaking any rules.

When asked if the companies with suspendedlicencesare allowed to use insurance agents, Service NL pointed to the legislation.

"A funeral home is not permitted to act as a seller or otherwise sell, offer to sell or arrange the sale of a prepaid funeral contract or prepaid funeral service unless they hold a license under the Prepaid Funeral Services Act," reads the department's response.

"If a home does a 'pre-arrangement' or 'pre-planning' contract, any insurance arrangement to pay for the funeral must be done in compliance with the Insurance Adjusters, Agents and Brokers Act."

While the terms sound similar, PaulOramsays"prepaid" and "pre-arrangement" don't mean the same thing.

"'Prepaid' means when someone comes in with a cheque or money, and they pay for the funeral ahead of time," he said.

"'Pre-arrangement' would be when someone comes in the door and they just make an arrangement for a funeral. There may never be any money changed hands, they may already have life insurance, or they may opt to do what we suggest people do now, because we don't do prepaid funerals we just pass them on to an insurance agent inGlovertown."

Bulletin on insurance sent to funeral homes

Just a few months ago, the provincial official in charge of prepaid funeral regulations issued a bulletin to remind businesses about the rules.

"No funeral home operators should be providing any services regarding insurance unless they are licensed to sell insurance," reads the bulletin.

"A partnership or corporation that acts as or represents or holds itself out to be an insurance agent or broker while not holding an insurance licence is guilty of an offence."

The bulletin adds that "it is not permitted to solicit the general public for insurance."

It says activities that require an insurance licence include:

• Dealing with an insurance application for a person other than one for yourself.
  
• Making recommendations or giving advice on an insurance policy, plan or program.
  
• Acting or helping in soliciting, negotiating or procuring insurance for another person.
  
• Soliciting a person to purchase insurance.

Service NL says it sent the bulletin "to ensure that homes were aware of the legislative requirements under the Insurance Adjusters, Agents and Brokers Act and Prepaid Funeral Services Act regarding insurance."

Province pushed for compliance in 2015

The Prepaid Funeral Services Act, which came into effect in 2000, was established to "protect consumers and industry in the event of a failure of a service provider in the province."

It requires the prepaid funeral licensee to put money into a consumer protection fund, keep separate trust funds, pay an annual licence fee, and provide the province with audited financial statements.

Three years ago, the province put on a push to ensure funeral homes were following the rules.

Government documents from 2016 note "ongoing compliance issues with a number of sellers," with "several attempts" made to get licensees to comply with filing audited financial statements.

Cease and desist letter sent

Funeral homes owned by Terry Green were previously flagged for allegedly breaking the rules.

Three months after the licence suspensions for Botwood, Sunset Memorial and Gordon Woolfreyfuneral homes came into effect in 2016, Service NL became aware that all three had been "in direct contravention of the act."

The funeral homes were "advertising and soliciting the sale of prepaid funeral services on a radio station in Central Newfoundland and on a website as Sunset Memorial Funeral Home," government briefing materials note.

As there is an active investigation underway which could lead to legal action, information concerning this file has to be kept confidential.- Provincial government documents from 2016

The businesses were served a cease and desist order, and according to the documents, they complied.

But the documents state the investigation into the businesses was also "considering other issues" that could lead to legal action.

"Information concerning this file has to be kept confidential," the documents read.

In its recent email response toCBCNews, Service NL says the department regularly consults with its solicitors, including on matters related to prepaid funerals.

"No charges have been laid in any of these cases," the email reads.