Should I get a funeral plan?

Have you considered getting a funeral plan or perhaps you already have one? Have you seen the recent news about the changes to the regulation of pre-paid funeral plans that comes into place on 29 July 2022 and feel a little apprehensive about what that means for you?

What is a funeral plan?

A pre-paid funeral plan allows consumers to pay for their funeral upfront or in instalments. This can help to protect against rising funeral costs. For many years, the funeral industry was unregulated in its selling of funeral plans, although the Funeral Planning Authority did provide a code of conduct that all members had to comply with.

Changes to the regulation will see customers protected when the Financial Conduct Authority (FCA) take on the responsibility of supervising and regulating the sales of funeral plans. But what does this mean for you, if you are thinking of taking out a new plan or already have one in place?

What rules will be in place regarding funeral plans after 29 July 2022?

To enhance consumer protection for funeral plans, from 29 July 2022, the following rules will be introduced:

• Banning cold calling and setting new standards on advertising to ensure plans are sold fairly;
• Banning commission payments to intermediaries, such as funeral directors, to ensure products represent fair value;
• Carrying out full checks on the fitness to operate of those selling funeral plans, in order to improve governance standards and oversight;
• Guaranteeing that funeral plans will always deliver a funeral unless the customer dies within 2 years of taking out the plan, in which case a full refund will be offered; and
• Guaranteeing that customers will receive a full refund if they cancel a plan within 30 days of purchase, or pay only a reasonable charge later on.

To gain approval to operate in the regulated market, firms will be subject to rigorous assessment.

How can I check if my funeral plan provider has been approved?

As of 1 July 2022, according to the FCA, although no providers have been approved yet however they intend to authorise 24 providers. In addition to:

• Sixteen providers had told the FCA they would not be applying for authorisation and were planning to transfer their existing plans to another provider;
• Five providers that had yet to submit an application;
• Thirteen had withdrawn their applications to the FCA.

You can check out the status of your provider by checking the FCA website.

What if my provider isn’t approved by 29 July 2022?

Any provider that is not authorised (either directly or as an AR) by 29 July 2022 must cease selling and/or administering funeral plans before the FCA regulation takes effect. This includes firms that want to carry out pre-existing plans. It will be a criminal offence to carry on regulated activities relating to funeral plan contracts without authorisation to do so, unless exempt. Providers who, for whatever reason, will not be authorised by 29 July 2022 should stop selling funeral plans and transfer their existing books of business to another provider who will be authorised, or wind down their operations.