Opinion Piece: Should Funeral Plan Providers Be Financially Regulated?
On 1st June 2018, the UK government announced new plans to help stop grieving families from being ripped off. A consultation was launched looking into tougher regulations for the pre-paid funeral plan sector under the Financial Conduct Authority (FCA).
Funeral plan: a contract with a provider who arranges and pays for the funeral upon the death of a customer. These may be offered in trust or insurance form, allowing customers to pay for a funeral in monthly instalments and safeguard against future costs.
Regulation of Pre-Paid Funeral Plans: The Current Situation
According to research conducted by Citizens Advice Scotland and Fairer Finance, people are being pressured, harassed or misled by some pre-paid funeral plan providers when they’re at their most vulnerable.
UK Gov reports that annual sales of plans grew 245% in the decade between 2006 and 2017, but regulation has remained unchanged since 2001. The Guardian estimates this relates to around 1.3 million people in the UK.
Currently 95% of the funeral plan sector is voluntarily regulated by the Funeral Planning Authority (FPA), however abiding by the organisation’s code of practice is not legally required. Furthermore, the FPA cannot stop untrustworthy providers from trading.
In a statement, Economic Secretary to the treasury, John Glen, said:
“I’m appalled by the lengths that some dishonest salesmen have gone to in order to sell a funeral plan. It breaks my heart to think that our oldest and most vulnerable are being pressured into funeral plans that leaves their grieving families out of pocket.
“There are thousands of pre-paid funeral plans bought each year, and most providers are fair and legitimate. But tougher regulation will ensure robust standards are enforced for all plan providers, and protect individuals and their families if things go wrong.”
Under current rulings, if a plan is mis-sold by an unregulated provider, there are no protections from the Financial Ombudsman Service or if the provider goes out of business.
Should Pre-Paid Funeral Plan Providers Be FCA Regulated?
The government consultation is now over, and feedback is being analysed – the outcome is expected any day now. However, as pre-paid funeral plans share many characteristics with other similar financial service products that are regulated, many are expecting stricter regulations as an outcome.
If you run a business offering a similar system and would like to ensure your staff are suitable for working with vulnerable people, FCA screening may help.
At CBS, we offer FCA check services under the Financial Services and Markets Act 2000 which ensures individuals are fit and proper to carry out such a position. Get in touch with our team to discuss what the changes could mean for you and your screening processes.back to news
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