Treasury move to protect vulnerable from unscrupulous funeral plan providers
A crackdown on “rip-off” pre-paid funeral plan providers who prey on the vulnerable has been signalled by the Government.
The Treasury is proposing bringing the sector under the regulation of the Financial Conduct Authority (FCA) after evidence showed elderly people are being “pressured, harassed and misled” by some operators.
Action is needed because 95% of the market is voluntarily regulated by the Funeral Planning Authority (FPA), which lacks the power to prevent pre-paid plan providers from trading and whose code of practice is not legally binding, according to ministers.
The Treasury says it is launching a consultation process to prevent people being “ripped off” when they are at their most vulnerable after alarming research conducted by Citizens Advice Scotland and Fairer Finance.
Economic Secretary to the Treasury John Glen said: “I’m appalled by the lengths that some dishonest salesmen have gone to in order to sell a funeral plan.
“It breaks my heart to think that our oldest and most vulnerable are being pressured into funeral plans that leave their grieving families out of pocket.
“There are thousands of pre-paid funeral plans bought each year and most providers are fair and legitimate.
“But tougher regulation will ensure robust standards are enforced for all plan providers and protect individuals and their families if things go wrong.”
Demand for funeral plans has grown rapidly, with annual sales rising by about 245% between 2006 and in 2017, but regulations have remained the same since 2001.
Fairer Finance managing director James Daley said: “Funeral plans are an important and valuable product, and we hope regulation of this sector will give responsible companies the chance to thrive and give consumers the necessary reassurances they need to buy in confidence.
“People who buy funeral plans are not around to measure delivery against their expectations, which is why it’s so important there are clear rules around how companies must behave.
“With most plans costing over £3,000 – it’s important that customers can have total confidence that their money is safe.”
In 2017, there were 207,700 plan sales made by FPA registered providers, and 1,313,100 undrawn plans.
Simon Cox, from funeral provider Dignity, said: “It is excellent news that the Government has decided to do something about mis-selling in the funeral plan sector.
“Our research has shown that bad practices like persistent and pushy cold-calling are rife among firms that have no oversight from a regulatory body.
“Most consumers wrongly believe that their plan is regulated by the FCA, when in fact they aren’t. The majority are registered with the industry’s own voluntary regulator, but there are a growing number of new providers taking advantage of a regulation gap and not regulated at all.
“There are a number of options open to the Government and we will be recommending that the Funeral Planning Authority is put on a statutory footing to compel all organisations selling funeral plans to be regulated.
“We believe FPA regulation is the right option at the moment; the FPA understands the funeral plans sector and with more teeth would be an effective regulator.
“However, what is most important is that the regulation gap in the sector is filled. If this option is not possible, then a body with statutory powers such as the Financial Conduct Authority, is infinitely better than the status quo.”
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