Around 1.2m people within the UK now have a plan and the sector has seen a five fold increase within the last ten years.
The report, “Is the prepaid funeral planning market working well for consumers?” suggests there is evidence of mis-selling within the industry and claims that millions of pounds worth of consumers’ money could be at risk.
A telephone survey of 1001 adults over 50 found that, of people who have been marketed to by funeral plan providers or their agents, nearly half (49 percent) of those contacted over the phone have been re-contacted two or more times. 46 percent agreed that they were being pushed to take out a plan when re-contacted and 63 percent felt this additional communication was not ‘useful’.
The report states that consumers do not understand the differences between plan types or what is and isn’t guaranteed by their plan.
Fairer Finance also found ‘poor’ transparency around what happens to customer money. It pointed to a lack of consumer protection. The industry is subject to voluntary regulation by the Financial Planning Authority. Some providers are not part of this scheme and third party sales firms are not even subject to voluntary regulation.
James Daley, managing director and founder, Fairer Finance, said; “Funerals have become ever more expensive over the past decade, and pre-paid plans can be a great way of locking in today’s prices, whilst also ensuring your family isn’t left with this significant financial burden after you’re gone.
“Although there are some reputable providers working in the interests of consumers, the sector has rapidly expanded over the last few years, with our research revealing a worrying number of conduct issues and lack of consumer protection.
“The combination of a fast growing market fuelled by high pressure sales to a potentially vulnerable customer base is creating a perfect storm. A growing number of customers are likely to be let down when their plan is claimed on – with some funeral plan providers passing on significant extra costs to the families. And there is a concern that client money is not always being adequately looked after. Without intervention, we may yet see a Farepak-style collapse in this market, which leaves thousands of customers out of pocket.”