On 20 September 2023, the FCA published a Dear CEO letter, in which it outlines its priorities for the funeral plans sector for 2023-25. The letter also updates firms on the specific risks of harm that the FCA is concerned about and what it expects firms to do about them.

The FCA’s sector specific priorities are as follows:

Setting and testing higher standards

  • Throughout the funeral plans sector, the Consumer Duty must play a pivotal role in focussing firms’ attention on the need to deliver fair price and value for funeral planning products. The FCA expects firms to take appropriate action to ensure that their products and services offer fair value and meet consumers’ needs, that consumers get clear information they can easily understand and that they get the support they need when they need it.
  • The FCA expects firms to support consumers where their circumstances change. For example, by considering flexibility to consumers who are struggling to make instalment payments and by ensuring any cancellation charges are proportionate.

Reducing and preventing serious harm

  • The FCA expects principal firms to have effective oversight of their Appointed Representatives (ARs) and ensure they are competent, financially stable and deliver good outcomes for consumers.
  • Principal firms are also expected to take assertive action with ARs that fall below the standards set by the principal firm, including restricting their regulated activities and cancelling their AR status. The FCA has recently gathered important data on ARs in the market via an information request to principal firms. The FCA will use this to identify outlier firms and risks of harm, and will act where necessary.
  • The FCA expects firms to uphold good standards of behaviour and professionalism. Firms should also nurture healthy cultures where employees are treated with respect and feel safe to raise concerns without fear.
  • Firms should also ensure they minimise the impact of operational disruption, particularly in relation to oversight and contingency planning on outsourced services.

Promoting competition and positive change

  • Firms need to take action to improve the quality of their regulatory returns, to ensure they are providing accurate information. The FCA will be holding roundtable sessions over the coming months to help firms understand its expectations, best practices and measures to take to improve data accuracy and quality.
  • Firms that act as a principal firm with ARs must also provide regular data about their ARs. From December 2023, this includes AR complaints and revenue data once a year in RegData, reported in line with the Accounting Reference Data.
  • The FCA reminds firms with networks of ARs that it is their responsibility to exercise adequate oversight of ARs and to ensure they have appropriate control frameworks to identify unauthorised business or any other conduct that may pose risk or harm to consumers, and to take appropriate action where an AR falls below the FCA’s regulatory standards or the standards that the principal firm has set for them.