Defaqto is adding pre-paid funeral plans to the list of financial products it provides star ratings for.
The organisation has awarded stars to 97 plans from 26 providers, giving five stars to products from the Post Office, Dignity, Age UK, the Co-operatve and the Lincolnshire Co-op Funeral Service.
These plans are taken out by customers who want their funerals paid for in advance, so that their families do not have to pay for them.
However, there have been concerns about rogue practices in the sector, with pre-paid funeral plans currently unregulated if they are covered by insurance or trust arrangements.
Steve Wallis, from plan provider Dignity, said the sector would “benefit from increased scrutiny and stronger regulation.”
“There is significant consumer mis-understanding about what different funeral plans cover and Defaqto’s star rating will give consumers an independent way to assess which plans are best,” he said.
Ben Heffer, insight analyst for wealth and protection at Defaqto, said that Defaqto has “assessed the key features and benefits across providers and plans – and we hope that the star ratings can help provide the first step towards a more transparent and clear market place for consumers.”
However financial adviser Jason Witcombe, from Evolve Financial Planning in Kent, said that for advisers, funeral plans are “a niche product”.
He said: “Life insurance comes up a lot, but that is about protecting the family not leaving a legacy.
“When it comes to estate planning we advise on the broader issues, including inheritance tax, but I’ve not come across funeral costs being an issue. It’s not something I think I’ll ever really be raising.”
rosie.murray-west@ft.com
