On 29 July 2022, The FCA announced that it will regulate pre-paid funeral plans, following legislation passed by parliament. The FCA is authorising 26 providers. Together, these firms hold approximately 1.6 million plans, which make up 87% of the market.
Regulation of the sector will bring higher standards and boost consumer protection. New rules, which take effect from today include:
- A ban on cold calling.
- A ban on commission payments to intermediaries, such as funeral directors.
- A requirement for a funeral plan to deliver a funeral unless the customer dies within two years of taking out the plan, in which case a full refund will be offered.
Furthermore, customers of authorised providers will now have access to the Financial Services Compensation Scheme (FSCS), so their money is protected if their provider fails. Consumers are also able to complain to the Financial Ombudsman Service (FOS), even if the issues they are complaining about happened before July 2022 if the firm was registered with the Funeral Planning Authority (FPA) at the time the issue occurred.
13 firms that applied before 1 March 2022, but have not been authorised, have until 31 October 2022 to transfer their plans to authorised firms or refund their customers. These plans are not covered by the FCA regulation, meaning there is no protection by the FOS and FSCS until they are transferred to authorised providers.
