‘Shameful’ tactics in funeral plan sales targeted

The Treasury has announced proposals to regulate UK funeral providers through the Financial Conduct Authority (FCA), offering protection to customers.

Companies that use high-pressure or bullying tactics to sell funeral plans could face fines and criminal charges, the government has announced in a move welcomed by Sutton Coldfield-based funeral provider Dignity.

New plans to regulate the pre-paid funeral sector for the first time aim to ensure the market is competitive and consumers, who are often old and vulnerable, understand what they are buying.

The regulation of the sector will now be overseen by the Financial Conduct Authority (FCA). It will design a framework to bring regulation in line with other financial products, such as insurance, and ensure that providers are clear and fair in their treatment of customers.

This will also offer people access to the Financial Ombudsman Service.

The move comes after a recent call for evidence showed widespread concerns around the conduct of funeral plan providers, with some employing high pressure and misleading sales tactics in order to get customers to sign up to plans.

Under these new plans, anyone found breaching the regulations can have their authorisation revoked, face fines and even criminal charges.

City minister, John Glen, said: “Planning for your funeral can be a difficult experience, but one that many of us will need to go through at some point in our lives.

“It’s shameful that there are those out there who look to prey on people when they are in this often emotional and vulnerable state.

“That’s why I’ve taken the decision to regulate pre-paid funeral plans, so people can have more confidence in the products they’re being offered and peace of mind that their affairs will be handled correctly.”

Sutton Coldfield-based Dignity, the only stock market-listed provider of funeral related services, has welcomed the Treasury’s announcement.

Mike McCollum, chief executive of Dignity, said: “Dignity has long led the industry in best practice and has called for regulation of the pre-paid funeral plan sector to protect consumers.

“We are pleased that HM Treasury has taken this decision and, during the transition period, will continue to deliver the high standards of selling and administration of pre-arranged funeral plans that we already provide.”

Demand for funeral plans has grown by nearly 200 per cent between 2006 and 2018. Last year, 177,000 plans were sold and cost on average between £2,500 and £5,000. The legislation governing their oversight has not changed since 2001 and needs to be updated to address disreputable practices.

One example of this is when third-parties working on commission – like door-to-door salesman – pressure customers to buy plans in order to maximise their commission rather than to meet that person’s specific needs.

Although a regulator already exists, it operates on a purely voluntary basis and firms can choose not to sign up to the rules.

Last summer the government launched a call for evidence on how to strengthen the regulation of the sector.