Funeral plans may be the new PPI scandal
AS AN independent funeral director with decades of experience, I am concerned that pre-paid funeral plans may end up as a greater scandal than PPI. I have discussed my worries with the various suppliers, the Financial Ombudsman and financial experts, but none has shown the slightest concern. People are buying plans that are unsuitable for their needs and the promises given by some salesmen for these financial services companies are not always accurate. Some pre-paid plans are based on figures far below what a funeral costs today, never mind in ten or 20 years’ time. I know of instances of families buying plans who believe they can choose their funeral director, only to discover they are allocated one. Other plans allow you to choose a funeral director, but the family may struggle to get agreement from their choice who may not accept a plan with a value below £2,500 (which has been sold for perhaps £1,000 more) without a top-up fee. Insurance based plans are particularly troublesome. The family may not have enough in the plan to pay for a funeral, yet the company which sold it to them will do nothing other than unhelpfully suggest the funeral director asks the family for the difference at their time of need. And what happens when a person has been paying into an insurance plan for 20 years, but due to switching banks, illness, a simple mistake or forgetfulness, the direct debit is stopped? They may have paid in £7,000, but because they have failed to continue the plan, it lapses and no money is available to cover their funeral costs. I also believe the pre-paid funeral plan companies are underfunded, due to unrealistically high commission fees. The Co-op and Dignity can mop up the market in low-cost plans if they want, but a decade from now, they face hitting the financial buffers when those plans are redeemed.
JOHN PIDGEON, Cardiff.