On 5 July 2021, there was published:
- HM Treasury consultation concerning pre-paid funeral plan providers and the Financial Services Compensation Scheme (FSCS). In January 2021, the government legislated to bring all pre-paid funeral plan providers and intermediaries within the regulatory remit of the FCA with effect from 29 July 2022. In its March 2021 consultation paper, CP21/4 Funeral Plans: proposed approach to regulation (CP21/4), the FCA proposed requirements for funeral plan firms to protect funeral plan consumers from potential firm failures. The government and the FCA are not aware of any material failures in the funeral plan market to date. However, as set out in the March consultation paper, the FCA considers it prudent to protect consumers from potential firm failures, including by introducing FSCS protection for certain funeral plan activities from July 2022. Following further consideration, further legislative changes are deemed necessary to ensure that the FSCS can operate effectively for the consumers of pre-paid funeral plan contracts if a regulated funeral plan provider fails. The government is therefore now proposing a statutory instrument that will enable the FCA to make rules that will : (i) allow the FSCS to secure continuity of cover for funeral plan holders in appropriate circumstances; and (ii) give the FSCS further rights in relation to the trust assets and insurance policies backing funeral plans. The deadline for comments on the HM Treasury consultation is 3 September 2021.
- FCA Consultation Paper 21/20: Regulation of funeral plans – Further proposals (CP21/20). Following the above HM Treasury consultation the FCA is consulting on proposed rules that seek to minimise the harm to consumers if a regulated funeral plan provider fails by ensuring that contracts can be transferred to new providers where possible, and that the FSCS can arrange continuity of funeral plan contracts or pay appropriate compensation if a firm is not able to meet its liabilities. The deadline for comments on CP21/20 is 31 August 2021.
- FCA Policy Statement 21/8: Regulation of funeral plans – Feedback to CP21/4 and final rules (PS21/8). In PS21/8 the FCA provides feedback to the responses it received on CP21/4 and sets out its final rules and guidance. Firms engaged in funeral plans activities should consider the final rules set out PS21/8 and consider whether they wish to continue in this market beyond 29 July 2022 when FCA regulation begins. The FCA’s rules will take effect from this date regardless of if a plan provider is authorised and on the FCA Register prior to this date. Any firms that are not authorised or do not become Appointed Representatives by 29 July 2022 will have to cease trading in relation to funeral plans before FCA regulation takes effect. From 29 July 2022 it will be a criminal offence for plan providers to carry out funeral plan contracts without authorisation.