On 5 November 2021, the FCA released Policy Statement 21/15: Regulation of funeral plans: Feedback to CP21/20 and final rules (PS21/15).

On 5 July 2021, the FCA published the final rules for the regulation of the pre-paid funeral plans market in Policy Statement 21/8: Feedback to CP21/4 and final rules, which will take effect when the FCA becomes the statutory regulator for the market from 29 July 2022.

At the same time, the FCA issued a further consultation, Consultation Paper 21/20: Regulation of funeral plans: Further proposals (CP21/20). This set out the outcomes the FCA wants to see for consumers in the event of a firm failure. It contained proposals on the resolution of regulated funeral plan firms and Financial Services Compensation Scheme (FSCS) protection, and the FCA’s proposed requirements for the structure of funeral plan providers’ trust and insurance arrangements. It also set out additional proposals for the regulation of funeral plans.

In PS21/15 the FCA summarises the feedback it received to CP21/20 and sets out further final rules on the regulation of the pre-paid funeral plans sector. In particular, the FCA has provided further guidance to clarify some issues for trustees of funeral plan trusts, insurers and faith bodies. The new rules will apply from 29 July 2022, when the FCA takes on responsibility for regulating and supervising the pre-paid funeral plans market.

The new rules are in addition to the measures already introduced:

  • banning cold calling and setting new standards on advertising;
  • banning commission payments to intermediaries;
  • carrying out full checks on the fitness to operate of those selling funeral plans;
  • guaranteeing that funeral plans will always deliver a funeral unless the customer dies within 2 years of taking out the plan; and
  • guaranteeing that customers will receive a full refund if they cancel a plan within 30 days of purchase.

Applications for authorisation for firms intending to remain in the pre-paid funeral plans market after 29 July 2022 opened on 1 September 2021. Firms intending to apply for authorisation should do so as soon as possible.  Firms that don’t intend to apply for authorisation should stop selling new plans and should prepare to transfer their existing books of business or wind down in an orderly way before FCA regulation starts.

Consumers won’t know yet if their plan provider will be authorised by the FCA. Until the regulation comes into effect they cannot make a complaint to the Financial Ombudsman Service or make a claim to the FSCS. If their plan provider fails, their money won’t be protected. To help new and existing customers, the FCA has published a list of all known funeral plan providers and the status of their applications for authorisation.