The sale of prepaid funeral plans is not regulated by the Financial Conduct Authority (FCA) who regulate the majority of the UK's financial market, but by the Funeral Planning Authority (FPA).
We asked the FPA to tell us what they were all about and what protection consumers received:
The Funeral Planning Authority (FPA) is a self -regulatory body set up by the industry to provide a regulatory framework to govern funeral plans.
Registration with the FPA is voluntary but providers registered with the FPA are estimated to represent approximately 95% of the funeral planning market.
Registration with the FPA requires registered providers (RPs) to comply with a set of Rules and a Code of Practice, which aim to protect customers.
Registered Providers are subject to an annual registration process carried out by an independent Compliance Committee. As a minimum this process considers:
The trust deed or insurance arrangements to ensure these meet the requirements of the FPA Rules. In particular, a key component of this is to ensure there are independent trustees.
Accounts from the provider company and the trust reflecting appropriate accounting for the trust and the liabilities that may be incurred by the provider that lie outside the trust or the insurance policy as relevant. This includes considering actuarial valuations of the trust by a qualified actuary.
A statement of Investment Principles and an understanding of how these are implemented in practice for trust based plans. Details of the insurance policy and the insurance company for insurance based plans.
An understanding of the detailed economics of the business.
An understanding of the relationships with funeral directors and the degree to which commercial agreements are in place for them to carry out funerals. If such agreements are not in place across the book of plans the Committee will wish to understand how this is allowed for in any assessment of liabilities.
The FPA believe that a similar degree of scrutiny is needed for customers of non-registered plan providers and suggest that as far as possible, prospective customers, or their advisers, seek to find out answers to these questions from such companies.
FPA register providers have to subject themselves to the FPA's complaints procedure through conciliation and arbitration provided by IDRS Ltd (a subsidiary of The Centre for Effective Dispute Resolution). In addition they have to be part of the FPA Pledge to Customers.
This means that, in the unlikely event of a Registered Provider becoming insolvent, the other Registered Providers shall co-operate and examine ways in which the FPA might assist in arranging delivery of the funerals of customers of the insolvent Registered Provider.
At Over50choices, we only recommend funeral plans that are regulated by the Funeral Planning Authority, as whilst they do not come under the FCA's control (although this is a possibility in the future), the governments Money Advice Service also recommends that your plan provider should be registered with the Funeral planing Authority following its guidelines.