The CMA has revealed it has abandoned plans to introduce cost controls on the funeral industry due to the impact of the coronavirus pandemic.
In March 2019, the Competition and Markets Authority (CMA) set out to investigate concerns it had about the funeral services sector following a market study into the effectiveness of competition in the sector.
The investigation focused on how people approach the purchase of a funeral under the “extremely difficult circumstances” following the death of a loved one.
The CMA said a funeral can be a “significant cost” made during a very distressing time, and so it is important that those who purchase funeral services are confident that the prices are “reasonable” and the quality is “appropriate”.
The CMA added that the investigation has identified a number of issues:
- Due to the inherent emotional distress people experience when arranging a funeral, they understandably tend not to spend time comparing providers. They typically choose to use a funeral director that has been recommended or is familiar to them. For crematoria, people generally select one that is closest to them geographically.
- Pricing and product information is not provided consistently by funeral directors in a way that allows people to compare different offers.
- The fees charged by funeral directors and crematoria increased at a rate well above inflation for at least a decade.
- Most people believe that funeral directors are regulated, but that is not the case in England, Wales and Northern Ireland.
- The investigation found that, although many funeral directors meet good standards, some are providing unacceptably low levels of care of the deceased.
- Regarding crematoria, there are high barriers to entry in the form of the planning regime, as well as building and operating costs, meaning that crematoria are generally few and far between. Most people have little or no choice about which crematorium to use as there is often only one option within a reasonable distance.
However, it said the “exceptional circumstances” of the coronavirus (COVID-19) pandemic, which were unforeseen when the CMA market investigation began, has had a “significant impact on the investigation, including making it difficult to obtain necessary data from funeral directors, crematoria operators and local authorities.
As such, the report setting out the CMA’s provisional conclusions of the market investigation provisionally recommends that when conditions are more stable, the CMA will consider whether a supplementary market investigation is needed.
The CMA’s provisional conclusions has three elements:
- Setting out clearly and fully in today’s provisional report the problems that the CMA has identified in its investigation.
- Identifying the kind of remedies most likely to address these problems, including the introduction of price controls, whilst recognising that coronavirus inevitably means that some of these cannot be designed and implemented in the short term.
- Implementing a set of practical and effective steps that can be taken immediately in order to protect people, such as requiring funeral directors and crematoria to be transparent in their pricing.
The CMA said it has provisionally decided that, in the short term, it will require all funeral directors and crematoria to provide customers with information on, and the prices of, the various services and packages they offer.
The CMA also proposes to continue “active monitoring” of the funerals sector with an obligation on funeral directors and crematoria to provide the CMA with key financial data every quarter.
Martin Coleman, CMA Panel Inquiry chair, said: “Given the inherently distressing circumstances in which people arrange a funeral, we want to make sure they can be confident that they are not being overcharged and that their loved one is cared for properly – this is what our investigation has focused on.
“The later stages of the investigation have been conducted in the midst of the coronavirus pandemic, which has caused a tragic increase in death rates and has materially changed how funerals are carried out. This has had a big impact on how far we can immediately address some of the issues we have identified.”
He added: “But there are remedies that are feasible and effective in the short term. We are proposing a package of ‘sunlight’ remedies which will shine a light for consumers on the pricing and practices of the sector and make sure that deceased people are cared for properly.
“Further change in the sector is necessary but some of the remedies we were considering could not safely be introduced in the middle of a national emergency. Our proposals will hold open the door to price controls when circumstances created by the pandemic change sufficiently to permit these to be considered.”