On 3 June 2019, HM Treasury published a consultation on its proposed regulation of pre-paid funeral plans.
Under the current regulatory framework, entering into a funeral plan contract as a provider is a regulated activity. However, a provider is excluded from carrying on this regulated activity if the plans into which it enters are either insurance or trust-backed and meet certain conditions. As a result, since the regulated activity was introduced, the Financial Services Authority/FCA have not authorised any firm for the purpose of entering into funeral plan contracts. The exclusions were introduced in 2001 because the then government considered that plans which met the conditions afforded sufficient consumer protection such that their providers did not require authorisation.
Some providers elect to become registered with the voluntary regulator of the sector, the Funeral Planning Authority (FPA). The FPA requires its members to abide by a set of rules and a Code of Practice that include standards on: conduct; marketing and advertising; information; contracts and documents; plan funds; and complaints and disputes.
Over the past few years, concern has grown about the potential risk of consumer detriment within the pre-paid funeral plan sector.
In June 2018, the government issued a call for evidence on proposals relating to the regulation of the funeral sector. The proposals sought that:
- all pre-paid funeral plan providers are subject to robust and enforceable conduct standards;
- there is enhanced oversight of providers’ prudential soundness; and
- consumers have access to appropriate dispute resolution mechanisms if things go wrong.
Responses to the call for evidence confirmed there is consumer detriment in the market. HM Treasury’s new consultation provides a summary of the responses to the call for evidence and consults on the government’s proposed amendments to the regulatory framework for bringing all funeral plan providers within the remit of the FCA.
The deadline for responses is 25 August 2019.