Changes to the regulation of pre-paid funeral plans mean thousands of customers are currently in limbo waiting to find out if their provider will be approved.
Any provider that does not submit an application to the Financial Conduct Authority (FCA) before 29 July will be committing a criminal offence if it sells or administers a funeral plan contract after this date.
In March one provider, Safe Hands Limited, went into administration after it withdrew its application and now 46,000 customers are waiting to see if they will get any money back.
Here, Which? rounds up the firms that have submitted applications and what you need to know if you are considering taking out a plan before July.
Why are funeral plans being regulated?
Funeral plans are not currently regulated, but there is a professional body for providers called the Funeral Planning Authority (FPA), which has a code of conduct that all its members must comply with.
From Friday 29 July, pre-paid funeral plans will have to be regulated by the FCA.
The FCA said this would ‘enhance’ consumer protection and introduce high standards so plans are sold fairly, perform as expected and provide value for money.
It also means cold calling and commission payments to intermediaries will be banned, those selling will be subject to full checks on their fitness to operate and a funeral will always be delivered after a moratorium period.
- Find out more: funeral plans explained
Find out if your provider has been approved
According to the FCA, no providers have been approved yet. However, out of 66 providers, 42 have submitted an application.
Some 15 providers have told the FCA they will not be applying for authorisation and are planning to transfer or have completed the transfer of their existing plans to another provider.
Six providers have yet to submit an application and three have withdrawn their applications to the FCA.
You can check out the status of your provider by viewing the table below, or by checking the FCA website.
Source: FCA website. Correct as of 7 April 2022.
What to do if your provider is transferring your plan
If your provider has told the FCA it will transfer your plan to another provider then it should contact you.
Make sure you respond to any communication you receive and if you have not heard from it yet, contact it as soon as possible.
You can find firm-specific advice on the FCA website.
For example, one provider, The Midcounties Co-operative Limited has recently transferred its existing book of plans to Centre England Co-Operative Limited – so you should get in touch if you have not been contacted yet.
- Find out more: how much does a funeral cost?
What to do if your provider hasn’t submitted an application
If your firm has not yet submitted an application it might not be authorised by the FCA in time for the 29 July deadline and will need to stop selling and carrying out funeral plans in the UK after this date.
If you have a plan with one of the following firms, you should get in touch with it now to find out what is happening with your plan.
- Fox Milton and Co LTD
- Funeral Plans Europe
- Iberian Funeral Plans
- PS Cremations Funeral Planning Limited
- Sovereign Lifecare
- The Independent Funeral Partnership
Fox Milton and Co Ltd trading as Unique Funeral Plans told Which? it will be applying for authorisation.
The Independent Funeral Partnership is part of Memoria Ltd, which has submitted an application. The Independent Funeral Partnership also told us it is in the process of acquiring another provider which has already submitted an application to the FCA.
We have contacted the other firms and will update this article when we hear back from them.
- Find out more: first steps when someone has died
What to do if your provider has withdrawn its application
Three providers have withdrawn their applications, including Safe Hands Plans Limited, Eternal Peace Funerals Plans Ltd and Aura Life Limited.
Aura Life Limited told Which? it plans on resubmitting its application and does not have any existing customers.
We have contacted Eternal Peace Funeral Plans to ask about its plans. If you have a plan with this firm and haven’t heard from it, you should get in contact as soon as possible.
People are advised to ask for their options in writing, when they can expect to hear from the firm and if it will still be able to deliver the funeral plan.
Those will existing plans can ask for it to be cancelled and request a refund of any money held in the plan. However, there may be a cancellation fee and you should check the conditions of your contract.
Safe Hands Plans went into administration on Wednesday 23 March with all funeral plans terminated with immediate effect affecting around 46,000 customers.
- Find out more: how to make a will
What to do if your plan is with Safe Hands
Dignity Funerals Limited has agreed to provide existing customers with funeral care arrangements until Wednesday 20 April.
After this date there is no confirmed plan in place. All plan holders should register a claim with the administrators and will be contacted in due course about how to do this. If you’ve not heard anything you should call the administrator’s freephone line on 0800 640 9928.
The restructuring firm appointed to handle the process, FRP Advisory, said Safe Hands does not have sufficient funds to give refunds in full as the value of the company’s assets is ‘significantly lower’ than the company’s liabilities.
No further direct debits or standing orders should be collected by the company, however, you should check yours has definitely been cancelled.
If you paid for part of your plan with a credit card, you may be able to get your money back using a Section 75 claim.
Customers should remain alert to fraud and if you are called by someone claiming to be from Safe Hands, FRP Advisory or any other company involved in the administration, you should end the call and contact it directly on 0800 640 9928.
- Find out more: how to claim back using Section 75
‘They convinced me my money was alright’
Steve Benson from Plymouth bought two Sapphire plans from Safe Hands for himself and his wife worth £6,390.
The 73-year-old was convinced by the endorsements in the Safe Hands brochure and said he often saw its ads on television.
He told Which?: ‘It seemed very safe and genuine, they never put any pressure on me to sign.
‘Everything was going along very smoothly until I read that funeral companies needed to be regulated by the FCA. I checked the companies registered and saw Safe Hands had withdrawn its application.’
Steve rang up Safe Hands and said he was told not to worry, but when he rang back three to four weeks later, he was told the company had entered administration.
‘When I phoned them up the first time, they said the money is in a trust and you’ve got nothing to worry about. That convinced me my money was alright,’ he said.
Steve is now waiting to find out how he can make a claim.
FRP Advisory said customer instalments were used to acquire investments, including equities, bonds, cash, real estate and loans.
It said the legal structure of these investments was ‘complicated’ and it needs to find out which ones can be realised for the benefit of plan holders.
FRP Advisory told Which?: ‘Essentially, the value of the investments is not enough to meet the funeral plan obligations of the company.’
Should I take out a funeral plan before July?
If you want to buy a funeral plan, we advise you to wait until the deadline if possible. This is so you can compare what’s on offer from each provider once it has been authorised.
By the end of May it may update some firms’ application status to ‘minded to approve’.
The FCA is warning people not to buy plans from providers which have withdrawn existing applications or are yet to submit one.
- Find out more: reasons to make a will
source https://www.which.co.uk/news/2022/04/pre-paid-funeral-plan-regulation-is-looming-is-your-provider-ready/