Funerals are big business. There’s no getting away from it, death is a fact of life.
We’ve all seen the adverts – well-meaning relatives set aside money for their loved ones to go towards the cost of their funeral, or as cash gifts in the event of their passing.
Making plans for your funeral is, of course, a perfectly reasonable thing to do, particularly for those looking to ensure their family members have one fewer thing to worry about during the grieving process.
A pre-paid funeral plan means that what can be a substantial bill is covered in advance or in instalments, and the customer is also protected from rising costs as well as, in many cases, being spared the actual arranging of their newly-departed relative’s send-off.
The plans are essentially contracts under which a customer makes one or more payments to a funeral provider, who arranges or pays for a funeral upon the death of the customer (or a named beneficiary). The payments made to providers are generally placed into a trust or buy an insurance policy and the money provides for a funeral when the time comes.
Those planning ahead can ensure arrangements are already in place, and they can cover the cost of a burial or cremation, a coffin, hearse or one of the many other expenses associated with a funeral.
But what if your best-laid plans have been mis-sold to you?
The conduct of funeral plan providers and brokers acting as third-party intermediaries (TPIs) has been brought into question, their practices not only meaning plans have been mis-sold, but also putting their customers’ money at risk.
These plans have, for years, had the approval of the Funeral Planning Authority and organisations regulated by the FPA are expected to stick to their code of conduct. Providers that sign up have to adhere to certain FPA guidelines and their code of practice but it is not compulsory regulation.
Unfortunately, there are companies who haven’t signed up to the FPA, and are therefore unregulated. It’s an issue the industry has taken steps to rectify, and HM Treasury is proposing that companies looking to sell pre-paid funeral plans to customers must be overseen by a regulatory body, namely the Financial Conduct Authority (FCA).
The FCA is clamping down on companies who take their customers’ money without proper consideration of how they have convinced them to hand over their money, or where it is being held or invested. They will take over as the industry’s regulatory body.
That comes into force from 29 July and is a direct result of the treasury and the FCA identifying activities of unregulated funeral plan providers.
Examples of practices that are believed to have contributed to this change include:
- Plans that do not meet the customer’s needs or expectations, and especially consumers who pay by instalments but that aren’t guaranteed a funeral service despite the assurances of their salesperson.
- High-pressure tactics used by brokers or intermediaries in order to sell plans. These include cold calling potentially vulnerable consumers, and coercing them into signing up to plans unsuitable for their needs.
- Consumers paying more than they should for the product’s benefits. This is primarily due to the high commissions and fees added to their payments, which are not always disclosed to them.
- Intermediaries recommending products based on the commission it earns them, which potentially creates a conflict of interest.
- Plans being unclaimed because their families aren’t aware they had any funeral provision, and are unable to activate or benefit from the plans when they are later discovered.
- Poor financial management of trusts, leaving insufficient funds to cover funeral costs.
The FCA will bring in new rules to protect customers. These include a ban on commissions for intermediaries and outlawing cold callers, to ensure the products they offer represent a fair price. Providers must guarantee they will always deliver a funeral – something that does not currently apply – as those who don’t will not be able to sell plans.
And those selling funeral plans will be subjected to fitness checks in order to maintain the standards customers are entitled to expect.
The FPA says that more than 1.6 million plans had been sold by the end of 2020. Once the new regulations come into force on 29 July, continuing to sell pre-paid plans without the appropriate authorisation will be a criminal offence.
But, until that FCA regulation is in place, hard-done-to consumers cannot lodge complaints to the Financial Ombudsman, and they won’t be protected by the Financial Services Compensation Scheme (FSCS) should their provider fail and go out of business. The FSCS has money set aside to compensate customers but they must have bought their funeral plan from a recognised and regulated business.
Unauthorised funeral plan providers
A number of firms are yet to confirm their plans for seeking FCA authorisation. We would not advise buying from a provider whose current status is ‘not applying for authorisation,’ ‘application refused’ or ‘application withdrawn.’
Such providers include:
Aura Life Limited
Bristol Memorial Woodlands FP Limited
Eternal Peace Funeral Plans Ltd
Farewill Funeral Plans Limited
Fox Milton and Co LTD
Funeral Plans Europe
Iberian Funeral Plans (if purchasing a plan for a funeral in the UK)
PS Cremations Funeral Planning Limited
Serene Funeral Planning Limited
The Independent Funeral Partnership.
Without FCA authorisation they will be forced stop selling and carrying out funeral plans by 29 July. If you have a plan with one of the above providers we advise you to contact them to confirm its status.
Making plans to ease the burden on your family is a sensible thing to do, and shouldn’t be fraught with pitfalls.
You may have been advised to buy into a plan to avoid the risk of prices rising uncontrollably in the future. But this should serve as a warning. As with virtually any service industry in which plenty of competition exists, prices can – and usually do – fluctuate and they are just as likely to come down.
So, what other red flags should you look out for?
- Sales people insisting that buying their plan will protect you against the rising costs they have seen in their crystal ball.
- Being told you should buy your funeral plan with a fixed price, ie their price, with administrative and cancellation fees built in, and with no flexibility to make changes should you want to do so later.
- A third party acting as an ‘introducer’. In most cases they will be selling a company’s funeral plan and earning commission (which you pay) to do so. If you are looking to get the best value when buying your funeral plan ensure there are no hidden fees or broker commissions.
- If your salesperson is not directly employed by the company they represent, and has no ID badge or business card bearing the company logo, you will most likely be paying their commission on top. Funeral plans (like any financial product) should be sold with the utmost transparency and if it is not by someone on the company’s payroll there are likely to be added extras.
- Being contacted by telephone by a seller is another potential red flag. In fact, unsolicited ‘cold calls’ will be outlawed in the very near future. They may tell you they are from a large, reputable and well-established company but the details of a funeral plan should be explained face to face and no pressure should be applied to the customer.
- A seller trying to close a quick deal so that their customer can benefit from a marketed ‘offer’ should ring an alarm. A professional sales person will outline any and all costs and charges and what the plan covers, as well as affording their customer all the time they need to make their decision.
Have you bought a funeral plan from one of these providers?
If you have a pre-paid funeral plan with one of the following you may be entitled to make a claim because of the way the sale of your funeral plan has been handled:
Austin’s Funeral Directors
Bristol Funeral Directors Limited
Chelmsford Star Co-operative Society Limited
Clydebank Co-Operative Society Limited
East of England Co-operative Society Limited
FPS 1995 Limited (previously Funeral Planning Services Limited)
Go As You Please Funerals 2009 Limited
Heart of England Co-operative Society Limited
Kingfisher Independent Funeral Services
Lincolnshire Co-operative Limited
Not for Profit Funeral Plans
Scottish Midland Co-operative Society Limited
Tamworth Co-operative Society Limited
Tappers Funeral Service.
Contact Barings Law on 0161 200 9960 for a free, no-obligation chat about your options and if you have a case to claim compensation.
In summary, cases of mis-selling pre-paid funeral plans occur when:
- The pre-paid funeral plans fail to meet the customers’ needs and/or expectations;
- Brokers have employed high-pressure tactics to sell plans that aren’t suitable;
- Cold-calling brokers convince potentially vulnerable customers to take out funeral plans;
- High commissions and fees mean customers are overcharged;
- Companies cannot deliver the funeral they guaranteed the customer;
- Intermediaries do not reveal that they earned a commission – or how much – for selling the plan;
- Plans go unused because the customer’s family members do not know they existed and cannot use them when they are discovered at a later date;
- Financial mismanagement by the plan provider doesn’t leave the money available to cover the funeral costs.
If any of the above sounds familiar to you, you may be a victim of mis-selling. If you have any doubts we can advise you with a short telephone call, and talk you through the action you need to take.
Barings Law’s experts can look into how your funeral plan was sold to you, and the details contained in its documentation to see if it meets your needs – and was sold as promised.
We offer our services on a no-win no-fee basis. This means we can offer our clients legal representation without any financial risk to them. We only take a fee in the event of our client’s claim being successful.
Speak to one of our advisers on 0161 200 9960 or click the icon at the bottom-right of this page to start a webchat.