Updated: 06 June 2022
The Funeral Planning Authority (FPA) currently regulates the funeral plan industry. On 29 July 2022, the FPA will be handing over this responsibility to the Financial Conduct Authority (FCA).
This article gives an overview of what the new regulation will mean for you, and if you should be concerned about the fact that you have already bought a funeral plan or are thinking of buying a funeral plan before the handover to the FCA in July 2022.
Who is this guide for?
Reading time:
5 mins
The Financial Conduct Authority's view on funeral plans
“Sold well, these can be valuable products that support consumers and their families at a difficult time in their lives.”
Source:
Financial Conduct Authority - Funeral Plans: Proposed approach to regulation.
Consultation Paper CP21/4 - March 2021
What if you want to buy a funeral plan in the weeks prior to regulation?
Some consumers may take the view to wait until 29 July 2022. Sadly, some people don’t have the luxury of time and would like to put a funeral plan in place now.
If that applies to you, you should be aware that if you enter a contract within one month of knowing that you expect to die within that time, the benefit of the funeral plan will not be provided. Depending on the funeral plan provider, the money will be refunded or used to pay towards a funeral "off plan".
RAO Article 59 (b): the provider undertakes to provide, or secure that another person provides, a funeral in the United Kingdom for the customer (or some other person who is living at the date when the contract is entered into) on his death;
unless, at the time of entering into the contract, the customer and the provider intend or expect the funeral to occur within one month.
Broadly these are the facts:
Quick 'back to basics': What is a prepaid funeral plan?
A funeral plan allows you to organise your funeral (or someone else’s) and pay for it at today's prices.
This gives you peace of mind that everything is sorted and that your loved ones are saved from a sudden and considerable expense (the current average cost is £4,184*). Prepaying also ensures loved ones are protected from significant increases in the price of funerals in the time between buying the plan and the point of need.
A surprising fact about funeral plans is that they are often sold cheaper than at-need funeral plans! (To learn more, read this article).
“[Prepaid funeral plans] are often sold at a lower price than at-need funerals”.
Source: Competition & Markets Authority (CMA) – Funerals Market Investigation 2020 Provisional Decision Report Appendix F: 5.153
How do funeral plans work currently?
For more information on how a funeral plan works, click here.
What’s included in the FCA's new proposed funeral plan regulation?
The new proposed approach to funeral plan regulation is about ensuring:
The FCA recognises that with regard to the proposed new regulation
“many well-run firms will already be meeting these standards; or be very close to them”.
Source: Financial Conduct Authority - Funeral Plans: Proposed approach to regulation.
Consultation Paper CP21/4 - March 2021 (1.7)
Which funeral plan companies will be authorised by the FCA?
For the most up to date information on which funeral plan companies the Financial Conduct Authority intends to authorise (or not), visit the FCA's website page here and look at the status column.
As you may not immediately recognise the funeral plan brand name you have bought or may be about to buy on the FCA's website, here's a short list of the brand names and the companies that operate them.
Funeral plan brand name | Operated by ("Firm") |
|---|---|
Choice | Alternative Planning Company Limited |
Perfect Choice | Ecclesiastical Planning Services Limited |
Simplicity Cremation | Dignity Funeral Limited |
What are the pros and cons of waiting until the new regulation comes into force in July 2022 to buy a funeral plan?
If you would prefer to hang on until 29 July 2022, as well as being assured that all funeral plan providers follow the FCA’s proposed standards as mentioned above - which, importantly, the FCA recognises that many funeral plan providers already do - here's how else you will benefit:
Why should I buy my funeral plan ahead of the new regulation?
“A funeral plan provider must ensure that, in relation to its subsisting funeral plans, there are adequate product governance arrangements in place, containing appropriate measures and procedures, to ensure a subsisting funeral plan is carried out in a way that complies with the firm’s regulatory obligations under the FCA Handbook.”
Source:
Financial Conduct Authority - Funeral Plans: Proposed approach to regulation.
Consultation Paper CP21/4 - March 2021 (7.4.2. )
Top 4 tips on how to buy a funeral plan wisely before the new regulation is introduced on 29 July 2022
If you want to buy a funeral plan ahead of the new funeral plan regulation taking effect, here are four things you can do now to ensure you buy wisely.
Make sure you choose a trusted funeral plan provider.
Alternative ways to sort your funeral affairs now
If you still want to postpone buying a funeral plan, here are some ways you can put your funeral affairs in order now.
Consider setting money aside in a savings account, an Over 50s policy or life insurance.
Bear in mind a funeral plan is the only way for you to ensure the funeral director’s costs are covered no matter how much prices may rise.
A funeral plan also saves loved ones from a possible 'emotional overspend'. When a funeral isn't prepaid, it’s all too easy for loved ones to let their hearts rule their heads at the funeral arrangement and “want the best”, then end up worrying about how they are going to pay for it.
Let loved ones know what your funeral preferences are, and put them in writing.
Our free Funeral Wishes Planner is a simple and highly effective way to pass on the detail of your send-off. You funeral wishes stops loved ones from worrying about the type of funeral you would have wanted and from a potential emotional over-spend. Our planner comes with a series of free supporting guides on your funeral options.
FREE Funeral Wishes Planner
Leave great memories, not loose ends.
Get the send-off you want and help loved ones avoid making decisions at an already difficult time. Leave clear instructions in this free Funeral Wishes Planner.
It's the perfect companion document for your Will and funeral plan if you have one.
* Source: SunLife (2021) Cost Of Dying Report
