Funeral plans get new rules

The controversial funeral plan market has been forced to introduce higher standards and provide better consumer protection.

The Financial Conduct Authority (FCA) will now regulate prepaid plans, following legislation passed by parliament.

The FCA is authorising 26 providers. Together these firms hold approximately 1.6 million plans, which make up 87% of the market.

New rules include:

● A ban on cold-calling.

● A ban on commission payments to intermediaries, such as funeral directors.

● A requirement for a funeral plan to deliver a funeral unless the customer dies within two years of taking out the plan, in which case a full refund will be offered. Customers of authorised providers will now have access to the Financial Services Compensation Scheme, so their money is protected if their provider fails. Consumers can also make a complaint to the Financial Ombudsman Service, even if the issue they are complaining about happened before July 2022 if the firm was registered with the Funeral Planning Authority at the time the issue occurred.

Emily Shepperd, executive director of authorisations at the FCA, said: “We have worked tirelessly to assess funeral plan providers, under our robust authorisation process. We are pleased that 87% of the market is now under regulation. With our new rules in place, people will be better protected, when they need it the most.

“It is unfortunate that a number of firms chose to exit the market, leaving customers, who had sought peace of mind for their loved ones, understandably worried.”

She added: “It is a good outcome for consumers.”