Competition authorities launch investigation into funerals market
The Competition and Markets Authority (CMA) is to launch a full-scale investigation into the funerals sector focusing on the above-inflation price rises for more than a decade.
The cost of a funeral has increased on average by 6% each year for the last 14 years, twice the rate of inflation and a cause for concern for the competition authorities.
This is exacerbated by the “vulnerability of many people when organising a funeral”, the CMA said, which it believes makes it easier for firms to charge higher prices.
The CMA will also investigate whether there is a lack of transparency and competition in local markets.
Dignity is one of the largest funeral providers in the UK. The Sutton Coldfield-based group is listed on the stock market and its share price has been under huge pressure for 18 months, as it faced both the prospects of an in-depth CMA investigation into the sector and, ironically, the impact on profits of competition and disruption in the market.
Last night’s close of 690p was more than 70% below its share price in November 2017 and close to an eight-year low.
Mike McCollum, chief executive of Dignity
Despite that, chief executive Mike McCollum had written to the CMA to support a market investigation.
He said: “We have long argued that action is required to improve standards across the sector and deliver better outcomes for customers.
“We recognise that there are specific challenges relating to vulnerable customers – particularly those who are financially vulnerable – and would welcome thoughts about how to ensure the market works better for them.”
He argued the funeral market is “highly competitive”, highlighting that no single provider has a market share greater than 16% and and the number of funeral directors has increased significantly in recent years.
Terry Tennens, chief executive of the National Society of Allied and Independent Funeral Directors, said the decision to conduct a market investigation “comes as no surprise”, given the concerns outlined in the authority’s interim report on the funeral market last November.
He added: “Many family-run funeral firms across the UK will welcome this decision but with the caveat that the panel’s investigation is thorough and gathers information and evidence from a wide range of stakeholders, in order to ensure any follow-up remedies are proportionate and do not result in small firms facing an unrealistic regulatory burden.
“We agree with the CMA’s concerns but it’s important that a distinction is made between the behaviour of family-run firms and large chains and crematoria operators. The latter two have significantly hiked prices in recent years in comparison to independent funeral director businesses. We hope the investigation panel will remain aware of this throughout its inquiry.”
The CMA investigation will be chaired by former Norton Rose Fulbright partner Martin Coleman.
