Elderly conned into buying funeral plans that don’t cover cost

PREDATORY funeral companies that pressure elderly people into buying plans that fail to cover the cost of their burial or cremation face a new crackdown by ministers.

More than 1.3million people have bought pre-paid funeral plans that enable them to pay for the cost of their services in advance, representing a fivefold increase in the number of such policies sold in the past decade.

However, campaigners have warned the sector is facing a mis-selling scandal amid evidence that families have been left footing the bill for funerals they thought were covered. Some providers are taking commission and fees of up to £1,000 – around a third of the cost of a policy – as well as imposing charges of up to £495 on customers who want to cancel the plans.

The Treasury will this week announce a consultation on plans to bring the sector under the regulation of the Financial Conduct Authority, which has the power to fine companies. While commission has been banned in the financial ser- vices sector, it is still rife among funeral plan providers as it is unregulated. Campaigners have also raised concerns that some providers are acting like “Ponzi schemes”, using new customers to fund existing plans.

James Daley, of the Fairer Finance consumer group, said: “At the moment there are high-pressure sales and a question about whether people’s money is safe.

“People who buy these plans want to make sure you have nothing more to worry about. But what is happening is that families are having to cover additional costs.

“We found evidence of bare-faced lies being told by salesmen. Some of the behaviour is predatory and exploitative. There are firms that are just there to make a quick buck.”

The packages sold allow people to pay for their funeral in a lump sum or by monthly payments over up to 15 years. The market, worth more than £2 billion, is booming, with more than 200,000 plans sold a year.

The sector is currently overseen by the Funeral Planning Authority, an “optin” scheme which has no substantive legal powers.