SPRINGFIELD, IL -- Comptroller Dan Hynes is proposing stronger regulations to protect consumer investments used to pay for funeral and cemetery goods and services.

Hynes said the legislation (SB1682) is needed to help prevent shortfalls similar to the one that occurred with a trust fund intended to pay for consumer funerals that was used by hundreds of funeral directors and administered by the Illinois Funeral Directors Association.

"This legislation eliminates regulatory cracks so that it will be more difficult for entities to avoid coming under appropriate regulatory authority," Hynes said. "It modernizes and strengthens oversight of consumer funds and increases the amount of information consumers receive about their investments."

AARP Illinois and Citizen Action/Illinois have endorsed Hynes' legislative proposal.

"Pre-paying for a funeral in Illinois shouldn't mean buyer beware," said Nancy Nelson, Advocacy Manager for AARP in Illinois.  "AARP strongly supports efforts to improve consumer protections and put an end to fraudulent and abusive practices in the pre-pay funeral industry."

"Protecting consumers' investments on the front end will save them grief and heartache on the back end," echoed William E. McNary, Co-Director of Citizen Action/Illinois.

Illinois funeral homes which allow consumers to prearrange for their funeral goods and services are required to place up to 95 percent of the funds from the sales in trust until the money is needed for those goods and services. Funeral homes which sell pre-need currently are licensed through the state Comptroller's Office and that requirement would remain in place.

The new legislation requires consumer dollars from pre-need funeral sales to be held in trust by an independent trustee regulated as a corporate fiduciary by appropriate state or federal authorities, such as the Illinois Department of Financial and Professional Regulation, or the federal Office of Thrift Supervision or the Comptroller of the Currency.  Funeral home operators no longer could act as their own trustee regardless of the size of their trust.  The legislation imposes higher investment standards, reasonable trustee fee requirements and strengthens auditing and notification requirements.

The legislation also would ensure better communication between the fund's trustee and consumers, Hynes said. Contracts purchased by consumers would have to clearly identify the trustee's name, address and regulator; and if funded by life insurance, the contract would have to identify the life insurance provider and regulator. Consumers would receive annual statements of their investments from the fund ‘s trustee including receipts, disbursements, and an explanation of any fees or expenses charged, the purchasers right to a refund, if any, and identification of the trust regulator. In addition, a new consumer protection fund for funeral preneed sales would be created, similar to the one currently in place for cemetery preneed sales.

Hynes said his office will push for additional reforms in cooperation with the recently created House Funeral and Burial Pre-Arrangement Investigation Task Force, but that his current proposal most directly addresses issues related to the IFDA Preneed Trust, overseen by IFDA Services, Inc., a subsidiary of the Illinois Funeral Directors Association. He also noted that additional regulatory and investigatory efforts by his office and several other government agencies are ongoing to address the shortfall in the IFDA PreNeed Trust, first identified in an investigation by Hynes' Office in 2005.

The legislation is sponsored by Sen. Deanna Demuzio, D-Carlinville, and Rep. Lisa Dugan, D-Bradley.

"This is common sense legislation that directly addresses the issues involved," said Demuzio, a long standing advocate for the elderly.

"It is important that we act quickly to put these important consumer protections in place," said Dugan, who will be guiding the legislation through the House.

During his tenure as Comptroller, Hynes has been a strong advocate for consumers. He's held public meetings around the state to hear consumer concerns about the funeral industry and he has continuously pushed for stronger industry regulations and consumer protections that have become state law.