- Consumer protection is vital to ensure funeral planning continues to grow
- Golden Charter highlights gap in enforcing existing rules and regulations
Funeral plan customers need to check whether providers are registered with industry watchdogs to ensure any complaints are independently investigated, leading provider Golden Charter believes.
It warns that existing rules and regulations are not being rigorously enforced for all providers across the industry which looks after more than £3.8 billion of customer money invested to pay for funerals.
The overwhelming majority of pre-paid funeral providers are members of the Funeral Planning Authority, the industry self-regulatory body which exists to protect consumers’ interests.
The Glasgow-based firm says consumers who are not covered by the FPA miss out on the protection of knowing that their provider will adhere to a strict code of practice and that the FPA will independently investigate and seek to resolve any complaint.
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Gordon Swan, Golden Charter’s Director of Communications, said: “Pre-paid funeral plans are an unusual contract. The person setting up the plan will not be there to see their instructions fulfilled. That role falls to their family and this added complication, along with the personal and sensitive nature of funerals, means getting it right every time is essential.
“In an increasingly regulated world, it may surprise some people that pre-paid funeral plans are not directly regulated in the same way as financial services. The question is how best to ensure that all customers taking out plans are protected?”
The Regulated Activities Order 2001 * under which the Financial Conduct Authority operates does cover funeral plans, but then specifically excludes those written under Trusts or backed by insurance where the insurance company holding the money is regulated by the FCA.
Trusts must be properly constituted in terms of independence from the seller, employ appropriately authorised fund managers, publish annual audited accounts and carry out regular actuarial valuations to qualify for this exemption.
A Private Member’s Bill – Financial Regulation of Funeral Services Bill – requiring pre-paid funeral plan contracts to be regulated by the Financial Conduct Authority, will have its second reading place in Parliament in 24 February.
“The future consequences of proposed further regulation are unclear, but if it reflected the model for financial services it would add cost and complexity and bring extra pressures to both funeral directors and to some of the smaller planning companies who may not be able to shoulder that extra expense without passing this premium on to the customer,” Gordon Swan added.
The debate over regulation is happening at a time when the parliaments in London and Edinburgh are grappling with how they can continue to provide support to those who struggle to meet funeral expenses. Financial support available from the Government has not risen since 2003, and funeral directors have been warning that this cannot continue. Adding to the regulatory burden may be the final straw for some firms and, without the participation of thousands of local firms of undertakers, the demands on taxpayers will only spiral further upwards.