Everything you need to know about the new FCA Funeral Plans

Significant changes to the regulation of UK funeral plans are coming in July 2022. Find out if you need to take action now…

What are the changes?

From 29th July 2022, all funeral plan providers must be authorised by the FCA. The FCA will be responsible for regulating the pre-paid funeral sector. After 29th July, all companies selling funeral plans must be either ‘directly authorised by the FCA, or be an Appointed Representative of a company authorised by the FCA’.

Unauthorised funeral plan companies will be operating illegally if they attempt to sell plans after this date.

Who is the FCA?

The Financial Conduct Authority (FCA) is the organisation that regulates the financial services industry in the UK. Their job is to protect consumers, keep the industry stable, and promote ‘healthy competition between financial service providers’.

What to do if you have a funeral plan or are going to get one?

It is essential that you do an online check on the funeral plan provider’s status before July 2022. You can search here for the list of providers. If your funeral plan provider has not applied or will not apply for authorisation, they should inform you. If they do not, you should contact them.

If buying a new plan, the FCA have stated,

“Don’t buy a plan from a provider if its status is, 'not applying for authorisation', 'application refused' or 'application withdrawn”.

The FCA advises you to, ‘Find out who the provider is by looking at your paperwork or by contacting the organisation that sold you the plan.’ It may not be the same company you purchased it from.

‘A Positive Step Forward for the Market’

A leading plan provider, Golden Charter, is positive that the new rules align with existing Funeral Planning Authority principles and bring more security to consumers. The changes add to the high standards most funeral directors already provide.

As Golden Charter is already a registered provider with the Funeral Planning Authority (FPA), the overseeing body for the UK funeral sector, their customers will still be protected if they arrange their funeral plan before July 29th, 2022. Thomas Furber offers Golden Charter funeral plans and Golden Charter already has an application in process to be directly authorised.

BBC Breakfast Coverage

The story was featured on BBC Breakfast on 23rd February, 2022. A FCA spokesperson said that some customers could lose some or all of the money invested in their funeral plan, if their plans are with companies who do not seek authorisation or if they withdraw from the market. Companies who do not apply for or fail to get authorisation, will no longer be able to sell or manage new plans from July 29th, 2022.

The Best Solution

The FCA legally requires unauthorised funeral plan companies to arrange for authorised companies to take over the plans they have sold. Leading plan providers are working to this effect and intend to contact consumers affected. It will protect most of or all of the client’s investment which may have been paid over a number of years.

A Worse Alternative

Alternatively, the FCA has advised that unauthorised companies should refund their clients before the new law takes effect. However, refunds could have substantial management fees subtracted from the total, meaning refunds are small or non-existent especially for plans taken out years ago.

Compensation

After 29th July, the Financial Services Compensation Scheme will cover funeral plans, but there is no protection offered for plans which cannot be transferred before that date. Therefore, some customers could ‘lose out’ and funeral directors might find out funeral plans have been transferred to them after the plan holder dies.

FCA Advice for Consumers

The FCA says that funeral plan companies should contact consumers to provide details of the new FCA regulations. Plus, some customers may have already been contacted and requested to change their plan to an authorised company.

NAFD Action

The NAFD (The National Association of Funeral Directors), along with the main UK funeral plan providers, have raised the issue with the FCA on many occasions. The NAFD has lobbied the UK Government to be ready to take action and work alongside the FCA to help consumers deal with this matter and make it clear which plans are authorised.

NAFD Advice for Consumers

The NAFD’s advice:

Contact your funeral plan provider. Ask what action they are taking with your plan before 29th July.
Check the FCA website for a comprehensive list for authorisation of companies.
If you’re not happy with your funeral plan provider, contact the FCA directly.

What should UK Funeral Directors do?

The NAFD have said that funeral directors should contact their funeral plan providers. It is important to check that they have made an application for authorisation. Also, funeral directors need to be authorised and trained by 29th July to legally operate as funeral plan sellers.

The NAFD also advises funeral directors to contact other funeral plan providers to see if they have been ‘nominated on other funeral plans’. There have been numerous instances of this happening.