The use of “high pressure and misleading tactics” in the sale of funeral plans will be brought to an end, City minister John Glen has announced.
New plans to regulate the pre-paid funeral sector for the first time will ensure the market is competitive and consumers, who are often old and vulnerable, understand what they are buying.
The regulation of the sector will now be overseen by the Financial Conduct Authority (FCA). It will design a new framework to bring regulation in line with other financial products, such as insurance, and ensure that providers are clear and fair in their treatment of customers. This will also offer people access to the Financial Ombudsman Service, enhancing consumer protection.
The move comes after a recent call for evidence showed widespread concerns around the conduct of funeral plan providers, with some employing high pressure and misleading sales tactics in order to get customers to sign up to plans.
Under these new plans, anyone found breaching the regulations can have their authorisation revoked, face fines and even criminal charges.
Glen said: “Planning for your funeral can be a difficult experience, but one that many of us will need to go through at some point in our lives. It’s shameful that there are those out there who look to prey on people when they are in this often emotional and vulnerable state.
“That’s why I’ve taken the decision to regulate pre-paid funeral plans, so people can have more confidence in the products they’re being offered and peace of mind that their affairs will be handled correctly.”
Demand for funeral plans has grown by nearly 200% between 2006 and 2018. Last year, 177,000 plans were sold and cost on average between £2,500 and £5,000. The legislation governing their oversight has not changed since 2001 and this will be updated to address “disreputable” practices.
One example of this is when third parties working on commission – like a door-to-door salesman – pressure customers to buy plans in order to maximise their commission rather than to meet that person’s specific needs.
Funeral plans are already regulated by the Funeral Planning Authority (FPA) but it operates on a voluntary basis and firms can choose not to sign up to the rules.
Last summer the government launched a call for evidence on how to strengthen the regulation of the sector and it will now consult on today’s proposals to ensure all pre-paid funeral plan providers are subject to the same standards, enhance the oversight of all the providers operating in this sector and make sure consumers can adequately dispute claims when things go wrong.