Instead Golden Charter has called for the Funeral Planning Authority to have increased powers and the ability to regulate across the full life of a funeral plan.
This comes after HM Treasury consulted on the funeral plan market earlier this year, saying pre-paid plans exhibited the characteristics of financial products, such as insurance, so it was "minded to strengthen regulation" by bringing all pre-paid funeral plans under the remit of the FCA.
But Golden Charter said if this happened it could put the choice of the funeral director at risk, as it would impose a regulatory burden that did not recognise the nature and size of a funeral director’s business.
While the majority of pre-paid funeral providers were members of the FPA, which exists to protect consumers’ interests, membership is voluntary meaning some providers and intermediaries are operating without an independent body to hold them to account.
Mark Moran, Golden Charter’s director of direct sales, said: "We welcome the call for evidence by HM Treasury and hope we can get to a point where consumers, and intermediaries, fully understand what they are getting when they take out a funeral plan, as well as ensuring any questionable practices are removed from the industry.
"As a founding member of the Funeral Planning Authority, consumer protection has long been a priority for Golden Charter and we strongly believe the best way forward when it comes to regulation is to make membership of the FPA mandatory and provide it with statutory powers so it can hand out appropriate sanctions."
Golden Charter, which is owned by an association of around 750 independent funeral directors, also said moving to an insurance-only backed model, as suggested by some, would preclude the majority of existing contracts and remove competition from the market since only four insurance companies currently underwrite such contracts.
Mr Moran added: “Funeral plans play an important part in later life planning, particularly as funeral costs have outstripped inflation in recent years. As such it is important that customers and intermediaries know they have the flexibility when it comes to paying for the funeral plan, as well as understanding what they will receive at maturity.
"We believe in offering a wide range of payment methods to ensure customers can select the option that best suits their individual circumstances, and our independent trust allows just that. Our low cost instalment payment option is an alternative to insurance-backed payments, offering similarly low premiums while ensuring any money paid in is not lost if payments stop."
But Kusal Ariyawansa, a chartered financial planner at Manchester-based Appleton Gerrard, said it was important for the field to be regulated by FCA because it reassured clients.
He said: "The knowledge that an adviser, firm or product is regulated by the FCA is highly reassuring. As a consumer I believe the FCA has stronger recourse than a self regulatory organisation funded by the industry. Whenever there is a financial commitment it would be safer adhering to a university set of rules through one regulator."
aamina.zafar@ft.com
