Pre-paid funeral plans -what you need to know

The Financial Conduct Authority (FCA) took over regulation of the sector from last Friday and will hold firms to new high standards.

It said people should only buy a funeral plan from authorised providers or appointed representatives.

The FCA is authorising 26 providers.

Together these firms hold around 1.6 million plans, which make up 87 per cent of the market.

There are many firms that haven’t been authorised, but they are still able to administer existing customer funeral plans until 31 October 2022.

However, they will be unable to administer new plans.

In other cases, some have ceased trading, including Safe Hands Plans, which went into administration a few months ago.

Despite some of the companies issuing refunds, this has left many thousands out of pocket, and uncertain about what will happen next.

What steps to take

·       If you have not been contacted by your provider, this may be an option for a refund, although there might be cancellation fees to pay depending on the terms and conditions.

·       If this has been paid via credit card, you may be eligible for a refund under Section 75 of the Consumer Credit Act 1974.

·       Safe Hands says that no further direct debit or standing order payments will be taken, but direct debits or standing orders should still be cancelled.

·       Dignity Funerals Limited has agreed to work with the Joint Administrators at Safe Hands to temporarily provide existing customers with funeral planning services.

·       You may be able to claim a partial refund as a creditor, via Safe Hands administrator’ FRP Advisory, if funeral arrangements are not needed immediately.

·       There is currently a freephone helpline ran by the administrators at Safe Hands on 0800 640 9928.

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What the new rules mean

New rules, which took effect from last Friday, include a ban on cold calling, a ban on commission payments to intermediaries such as funeral directors, and a requirement for a funeral plan to deliver a funeral unless the customer dies within two years of taking out the plan – in which case a full refund will be offered.

Customers of authorised providers will now have access to the Financial Services Compensation Scheme (FSCS), so their money is protected if their provider fails.

They can also make a complaint to the Financial Ombudsman Service (FOS), even if the issue they are complaining about happened before July 2022, if the firm was registered with the Funeral Planning Authority (FPA) at the time the issue occurred.

The FCA said firms that applied for authorisation but were not authorised have until October 31 to transfer their plans to authorised firms or refund their customers.

These plans are not covered by FCA regulation, meaning there is no protection by the FOS and FSCS until they are transferred to authorised providers.

Emily Shepperd, executive director of authorisations at the FCA, said: “We have worked tirelessly to assess funeral plan providers, under our robust authorisation process.

“We are pleased that 87 per cent  of the market is now under regulation.

“With our new rules in place, consumers will be better protected when they need it the most.

“It is unfortunate that a number of firms chose to exit the market, leaving customers, who had sought peace of mind for their loved ones, understandably worried.

“It is a good outcome for consumers that some providers have stepped in to provide funerals for the customers of these providers at short notice. We also continue to engage with the industry while it works on a longer-term solution.”

This announcement follows the confirmation of the FCA’s plans to introduce a new consumer duty from July 2023 to put customers first.

The consumer duty will apply to funeral plan providers and will mean their customers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the support they need when they need it.

Credit (PA)

Here is the list of providers that the FCA said it is authorising:

– Alternative Planning Company Limited (including Choice and Choice funeral plans from Funeral Partners)

– Avalon (Europe) Limited

– Avalon Trustee Company Limited

– Celebration Of Life Planning Ltd

– Central England Co-Operative Limited (including CEC FPL and CEC Funeral Plans)

– Co-Op Funeral Plans Limited (including Co-op Funeral Plans and Co-op Funeralcare)

– Crystal Cremations Ltd

– Dignity Funerals Limited

– Distinct Funeral Plans Limited

– Ecclesiastical Planning Services Limited (including Perfect Choice Funeral Plans)

– FA Albin & Sons Limited

– Family Funerals Trust Limited

– Freeman Brothers (including Peter Christopher Freeman and Brigid Mary Freeman)

– Golden Charter Limited (including Golden Charter and localfuneral.co.uk)

– Golden Leaves Limited

– Haven Personal Funeral Plans Ltd (including Haven Personal Funeral Plans and Haven)

– Independent Funeral Planning Services Ltd (including IFPS and The IFPS)

– Low Cost Funeral Limited (including Affordable Funerals and Memoriafunerals.co.uk)

– M&F Funeral Services Ltd (including M&F Funeral Services)

– Open Prepaid Funerals Limited (including Open Prepaid Funeral Plans and Open Funeral Plans)

– Peace Burials Limited (including Peace Funerals)

– Plan With Grace Limited

– Pure Cremation Funeral Planning Ltd

– Southern Co-Operative Funerals Limited (including Southern Co-op and The Co-operative Funeralcare)

– The Independent Family Funeral Directors Ltd (including Fosters Family Funeral Directors)

– William Alty & Sons Limited

There is also information about firms that will and will not be authorised at www.fca.org.uk/consumers/funeral-plans/providers-list.