Covid-19 crisis stymies CMA funeral provider investigation

The Covid-19 crisis has had a “significant impact” on the Competition and Markets Authority’s (CMA) investigation into the funerals and crematoria sector – a move that was welcomed by West Midlands independent provider Dignity.

The investigation, examining how customers are treated at a time when they are vulnerable to anti-competitive practice, has reported that, due to the tragic number of deaths from coronavirus since March, there has been an unprecedented increase in demand for funerals. This has made it difficult for the investigation to obtain necessary data from funeral directors, crematoria operators and local authorities, says the CMA – adding that this has “significant ramifications for the design and implementation of price controls as a possible remedy”.

This combination of circumstances highlights a serious dilemma. On the one hand, it is clear that the funerals sector is not working well and that reforms will be needed. On the other hand, the pandemic has created insurmountable obstacles to some of the solutions needed to design and implement far-reaching reform of the sector at this stage.

The CMA says it has no legal power to suspend or further extend the market investigation. Some of the remedies the CMA was considering, such as price controls, could not safely be introduced during a national emergency. The report setting out the CMA’s provisional conclusions on the market investigation provisionally recommends that when conditions are more stable, it should consider whether a supplementary market investigation is needed.

Martin Coleman, CMA Panel Inquiry chair, said: “Given the inherently distressing circumstances in which people arrange a funeral, we want to make sure they can be confident that they are not being overcharged and that their loved one is cared for properly – this is what our investigation has focused on.

“The later stages of the investigation have been conducted in the midst of the coronavirus pandemic, which has caused a tragic increase in death rates and has materially changed how funerals are carried out. This has had a big impact on how far we can immediately address some of the issues we have identified.

“But there are remedies that are feasible and effective in the short term. We are proposing a package of ‘sunlight’ remedies which will shine a light for consumers on the pricing and practices of the sector and make sure that deceased people are cared for properly. This will ensure that the prices of funeral directors and crematoria, and the quality of the service that funeral directors provide, are exposed to greater scrutiny, helping people to make the right choices during an incredibly difficult time.

“Further change in the sector is necessary but some of the remedies we were considering could not safely be introduced in the middle of a national emergency. Our proposals will hold open the door to price controls when circumstances created by the pandemic change sufficiently to permit these to be considered.”

The investigation by competition authorities into the industry, ironically launched at a time when increased competition led to a profit warning by Dignity, sparked a fall in its share price that has continued for more than two years.

Clive Whiley, executive chairman of Dignity, said: “Dignity has engaged openly and collaboratively with the Competition and Markets Authority throughout the funerals market investigation. We will take the time to fully assess the CMA’s Provisional Decision Report and its recommendations and will continue to constructively engage directly with the CMA through the statutory process.”