Sector reacts to FCA proposal
Following a probe by the Treasury, the government has announced that pre-paid funeral plans will be regulated by the Financial Conduct Authority (FCA) to crack down on the use of “high pressure and misleading tactics”.
Mike McCollum, chief executive at Dignity said: “We welcome funeral plan regulation by the FCA and believe it will deliver stronger protections and a better service for consumers.
“A clampdown on poor practice is something Dignity has long called for and it was our research with Fairer Finance that prompted the government to conduct its review into the sector.
He continued to say that the next two years of transition to FCA regulation “may create some uncertainty and confusion” for people who hold funeral plans and added it would be important that the government and the sector “worked together to support consumers”.
The Funeral Planning Authority (FPA), current voluntary regulator of the funeral plan market, was more critical of the ruling, as it said it believed the cost of regulation would see customers “be worse off”.
A statement said: “The FPA is extremely disappointed with the conclusions from this call for evidence. It is our belief that HM Treasury has settled on the FCA as a solution for reasons of political expedience, yet the problem, and the solution itself are both largely undefined. After 10 months of consideration, this lack of clarity and thought is deeply disappointing.
“The original consultation was prompted by concerns around sales processes, and money available to pay for funerals when they were needed. These concerns were principally related to the 5% of the market not regulated by the FPA.”
It continued: “Since the consultation began, we have seen the implementation of GDPR, which has driven significant improvements in how firms use personal data, and the permissions around that data (for sales purposes). Therefore, the primary concern must be prudential issues; is there enough money set aside, and is it being managed appropriately to provide the funeral when needed.
“Prudential challenges like this are not the FCA’s area of focus, and furthermore, this market is significantly smaller than any other market they regulate, meaning it is likely to get far less scrutiny.”
A spokesperson for Co-op added: “Funeral plans are an increasingly popular way for people to manage their own funeral arrangements and importantly can help manage the cost for families. But not all funeral plans are the same and some sectors of the market have not been working well for consumers. As the UK’s leading funeral provider we have been calling for some time for greater regulation in the market and for a future regulation model under the FCA.
“We welcome the move today by HM Treasury to seek to provide greater financial protection to the 200,000 consumers who invest in these plans annually, and look forward to engaging fully with the consultation.”
