Your Industry  

Advisers split on funeral plans coming under FCA remit

Advisers split on funeral plans coming under FCA remit
Pexels/Pavel Danilyuk

The Financial Conduct Authority is to bring pre-paid funeral plans into its remit in a few months but advisers have mixed views on what this could mean.

From July 2022, the FCA will take on responsibility for regulating the pre-paid funeral plans sector, with advice in this market falling under the “advising on investments” permission.

As part of its final rules on how it will regulate advice on funeral plans, there will be a ban on commission payments and changes to appointed representative permissions.

Tim Morris, IFA at Russell & Co Financial Advisers, said it is not an area he is involved in and he also does not plan to be in the foreseeable future.

“While I advise on personal protection, I don’t tend to advise on general insurance,” he said.  

“Saying that, now this is within the FCA’s remit, I will certainly consider it as part of a holistic financial plan.”

Morris explained that while some clients may prefer a whole of life policy to cover funeral costs, a specific funeral plan could prove a more cost-effective option.

Likewise, Cura Financial Services managing director Kathryn Knowles, said her firm began signposting to a funeral plan provider as part of its services about a year ago.

“A month or two ago they contacted us and said that they would no longer accept referrals from advisers, around the time that the FCA announcement was made,” she said.

“I'm not sure why that decision was made, or if it is something that other funeral plan providers have done too.”

Knowles said her firm does not have an active funeral plan that it can offer anymore. 

“I think that this is an area that should be regulated by the FCA as it does fall under long-term financial planning, just as whole life insurance does,” she said. “I feel that advisers should have a broad range of areas that they can signpost to, that do not fall under their own remit, and being able to direct clients to trustworthy funeral plan providers is something worthwhile (if needed). 

“Just like many advisers are building a network of people that they signpost clients to for mortgages, insurance, pensions, investments, the availability of regulated funeral plans would be welcome.”

However, while it was welcomed by some advisers, others were a little more sceptical and had their reservations.

A limited market?

Thameside Financial Planning director Tom Kean said he “certainly will not be offering this” to clients. 

“I’m not a fan of any kind of 'plans' when a good old fashioned savings pot is normally cheaper and easier. Why not just use an Isa instead? As for the FCA overseeing this, I’m looking forward to seeing how they will do it.”