Funeral Plan Regulation – Peace of mind

As many readers will know, the 29th of July is a big day for funeral plan companies.

From that day forward, the sale and management of funeral plans will fall under the regulatory power of the UK Financial Conduct Authority (FCA).

This means that the companies which sell and manage the funds related to funeral plans will need to be authorised by the FCA. This is a welcome move and will provide an added level of comfort and security for those who have already bought or intend to buy a funeral plan. Never before has it been safer or more prudent for you or your family to make the decision to pre-purchase a funeral from your trusted local independent funeral director.

A prepaid plan is a great way to save for a funeral and can help to remove some of the stress of arranging a send-off, regardless of whether it’s for yourself or a loved one. In the UK, there are over 1.6 million undrawn plans, demonstrating their increasing popularity in recent years. As with many financial products, it’s right that there is regulatory oversight and that consumers are able to access the information they need to make good decisions before making a purchase.

As a matter of fact, regulation of funeral plans has been needed for some time. An unregulated market has allowed some companies with less than acceptable governance, trust management and operating standards to sell funeral plans to consumers. This has understandably resulted in adverse media coverage of the prepaid funeral planning market, with journalists shining a light on unscrupulous practices which, thankfully, are the exception rather than the norm.

So, what does this mean for those who have purchased a funeral plan before today?

This will depend on whom you purchased the plan from. We are delighted to share that our recommended funeral plan provider has been approved for authorisation and plans purchased through us are now subject to regulation with additional backing from the Financial Services Compensation Scheme in the event our funeral plan provider ceases to exist in the future.

If you purchased your funeral plan with another provider you can check if they are authorised through the FCA website here, or by contacting them as soon as possible.

And what does this mean for funeral plans purchased from the 29th of July?

Funeral plans purchased from the 29th of July onwards will be subject to a series of extra regulatory measures. The FCA only approves companies to sell funeral plans if they are based in the UK, and can demonstrate to the Authority on an ongoing basis that they have appropriate resources and effective supervision for every stage of your funeral planning journey. The FCA carries out checks on the funeral planning business to ensure that their business model is suitable to carry out this important and sensitive regulated activity.

Funeral directors who offer funeral plans as part of their service to you will now do so as an Appointed Representative of their chosen funeral planning company. This means that you can be assured that their staff are appropriately trained to discuss your funeral planning needs with you. Importantly, they will have documentation proving their credentials.

Some funeral directors will choose to be Introducer Appointed Representatives. These funeral directors will refer you to their chosen funeral planning company, and the funeral planning company staff will take you through the purchase of your plan. Your chosen funeral director will still carry out the funeral, when the time comes.

What are the benefits of purchasing a funeral plan through a funeral director?

As a customer of an independent funeral director who is an Appointed Representative, you can discuss your funeral plan in detail. You can benefit from their knowledge of planning funerals within your local community – giving you the added comfort of their experience in planning every aspect of your funeral from a personalised reflection of your life, your favourite music, through to a simple cremation. Your local independent funeral director can help you make the choices that you would like for you and your family, bringing peace of mind. Additionally, by starting that relationship early you’ll have the time to really plan the funeral you want, as well as make amendments to the plan along the way if you change your mind about any aspect.

How do I know my money is safe?

Although your funeral director, as an Appointed Representative, will arrange your funeral plan with you, they will never hold any of your money. Whilst we expect to continue to serve our community long into the future, should the unexpected happen or circumstances change, your plan money is safe with the funeral planning company.

As part of FCA regulation, the funeral planning company has responsibility to keep your money safe, and is required to publish annually where the funds are placed into a secure and independent trust. You can find a copy of this report, called a Solvency Assessment Report, on the planning company’s website.

These funds are further protected by the additional backing from the Financial Services Compensation Scheme in the event the funeral plan provider ceases to exist in the future.

In addition, the new regulations mean that you will receive a statement direct from your funeral planning company every three years, to remind you what is included in your plan. Your funeral plan documentation includes contact information for the funeral planning company if you have any questions, or if you wish to make any changes to your plan.

What other regulatory changes are on the horizon?

This is one of many changes being made by the Government to the regulation of the funeral profession. Over 12 months ago, the Competition and Markets Authority (CMA) required all funeral directors to provide specific pricing on their website and on the exterior and interior of every funeral home. The aim of this was to help the public compare prices between different funeral businesses. The CMA’s Funerals Market Investigation Order 2021 also prevents practices that might result in bereaved people being denied choice. For instance, funeral directors must be careful in their relationships with organisations like care homes and hospices and are not allowed to enter arrangements that might encourage exclusive referrals.

There is also much work going on to improve the operating standards of funeral directors and again this is something we warmly welcome.

Our family owned business has always met the highest standards of funeral service by voluntarily adhering to the strictest funeral standards in the UK through our membership of the National Society of Allied and Independent Funeral Directors (SAIF) and its Quality Assurance programme – the only funeral inspection programme that has achieved the ISO 9001:2015 standard. We are inspected regularly and actively engage with our trade association to ensure that every aspect of our service is far above any future regulation. On top of this, we subscribe to SAIF’s consumer protection scheme, which is a three step complaints process for the extremely rare instance when things go wrong. It begins with our internal complaints process and can be escalated to SAIF’s Professional Standards Committee if the outcome is deemed unsatisfactory. If a client is still unhappy, there is a final option of independent arbitration. This is where a third party from the Centre for Effective Dispute Resolution examines the complaint and makes a legally-binding decision, which could include compensation if a complaint is upheld.

We are proud to be a family owned business, we are proud to be a representative of an authorised funeral plan provider and we are proud of the certificate on our wall that confirms we are a high quality provider of funeral services.

If you have further questions about FCA regulation of prepaid funeral plans, you may find this web page useful. Alternatively, a member of our team will always endeavour to assist.