Funeral plans ‘are the latest mis-selling con’

FEARS of another mis-selling scandal have been raised by a damning report into the funeral planning industry.

Millions of over-50s are coldcalled by pushy unregulated salesmen, it claims.

In the worst cases, customers are also being misled into thinking the plan will cover the entire cost of their funeral.

This is leaving bereaved families on the hook for hundreds, or even thousands, of pounds in costs, the report by Fairer Finance for funeral care firm Dignity said.

Salesmen – often working for telesales companies – are bombarding households with nuisance calls.

The research has estimated that up to six million people over the age of 50 have been contacted, with around a third of those feeling they have been pushed into taking out a plan.

The products allow people to put money towards the cost of their funeral when they die, either in a lump sum or monthly installments.

With funerals now costing an average of £3,900, the market is booming.

There has been a fivefold increase in the number of policies sold within the last decade, and around 1.2 million people own one. James Daley, founder of Fairer Finance, said: ‘The combination of a fast growing market fuelled by high pressure sales to a potentially vulnerable customer base is creating a perfect storm.

‘A growing number of customers are likely to be let down when their plan is claimed on – with some funeral plan providers passing on significant extra costs to the families.

‘And there is a concern that client money is not always being adequately looked after. With- out intervention, we may yet see a collapse in this market, which leaves thousands of customers out of pocket.’

Providers are also taking commission and fees of up to £1,000 for each plan sold, as well as imposing charges of up to £495 on customers who want to cancel their plans.

While commission has been banned in the financial services sector, it is still rife among funeral plan providers as the market is not regulated.

This also means that millions of pounds may be at risk, as plan providers are not covered by the Financial Services Compensation Scheme, which protects customers’ money if a firm goes bust. The report highlighted the high-pressure tactics used by some salesmen, such as offering £100 discounts to make an onthe-spot decision.

In one mystery shopping phone call, someone pretended to be a customer whose husband had suffered a stroke.

When the shopper said she would need to discuss the purchase with him, the operator asked: ‘ Is your husband still compos mentis after the stroke? Can he still make his own decisions? What do you think he’ll say?’

The findings of the report will be submitted to the Treasury, the Competition and Markets Authority, the Information Commissioner’s Office and the Financial Conduct Authority.

‘Creating a perfect storm’