The All-Party Parliamentary Group for Funerals and Bereavement has said the Financial Conduct Authority’s requirement for all prepaid funeral providers to get authorised by July 29 comes at a difficult time for the sector.
Last week, prepaid funeral planner Safe Hands fell into administration after withdrawing from the FCA’s authorisation process on February 15.
The company’s insolvency, which has put around 45,000 policyholders at risk, prompted a group of MPs led by Sir John Hayes to send out an announcement today (March 29).
It read: “The vast majority of prepaid funeral plans are run by businesses with properly funded trusts.
“In order to continue providing prepaid funeral plans, current legislation requires companies to achieve FCA authorisation by 29 July 2022.
“The process requires many thousands of businesses to be authorised (either directly or via their provider), and many tens of thousands of staff to be trained, at a time when the sector is still having to work hard to try and deal with the issues from the pandemic.”
The prepaid funeral sector has been overseen by the Funeral Planning Authority, which will be handing the baton to the FCA in July.
The FPA is a voluntary body which was set up back in 2002 in an effort to regulate the funeral plans sector. But around 2017, reports surfaced suggesting providers were ‘pressure selling’ and, in some cases, not funding plans properly.
Following these reports, HM Treasury looked into it and decided to transfer the sector to the FCA’s jurisdiction.
An FCA spokesperson told FTAdviser in February the new rules were to make sure consumers are sold products that offer fair value, including banning cold calling and all commission payments to intermediaries.
“We have been proactive to ensure that only firms which will meet our standards will be authorised by us, giving consumers confidence and protection in the event that things go wrong,” they said.
Once funeral plan providers come under our regulation, funeral plan customers will be able to make a complaint to the Financial Ombudsman Service. They will have protection from the Financial Services Compensation Scheme should their provider go out of business, though those with providers which do before July 29 will not.
In their announcement today, MPs said they were “concerned” by Safe Hands’ exit from the sector.
“The APPG believes nobody should be left without a funeral and is imploring firms to ensure affected people are given a dignified and special send-off,” MPs said.
Dignity Funerals Limited has been put in place for the next week while administrators explore potential outcomes for the tens of thousands of policy holders whose funds currently sit with Safe Hands.
“The sector has been working closely with the government to ensure customers are protected as we work towards regulation,” the APPG said.
Chairperson Hayes added: “We are working closely with the Treasury to ensure people are protected and that none of our constituents are left without a funeral.
“As chair of the APPG for Funerals and Bereavement, I have had the privilege to hear first-hand from those working in the sector, and their commitment to regulation should not be overshadowed by the very small number of rogue operators”.
Hayes said the APPG will continue to work with the government to ensure consumers are “not left out of pocket” should their provider fail to achieve FCA authorisation.
ruby.hinchliffe@ft.com
