Along with the summer, the 1st June marks the dawn of another important day; the day when both the Competition and Markets Authority (CMA) and the Treasury announced their reviews on both funeral costs and prepaid funeral plans in the UK.
At long last it appears that the somewhat shadier side of the funeral plan market will be forced to clean up its act, or move out of the way because by the sound of it, the big guns are coming to town – possibly in the form of the FCA (the Financial Conduct Authority).
Why is change needed?
The funeral plan market has expanded rapidly over the last few years as a growing number of people are choosing to fix their funeral costs at today’s prices. Unfortunately the lack of regulation means that although there are a number of reputable funeral plan companies out there providing an excellent service and value for money, disreputable companies have also started to sneak in, using hard sell tactics to mislead and in some cases force customers into buying cheap funeral plans that may not necessarily be fit for purpose.
The situation reached its climax when Fairer Finance, in partnership with Dignity produced an independent funeral plan review highlighting good and bad practices – recommending the Treasury act immediately to avoid any future Farepak-style collapse.
So the announcement of this long awaited funeral plan review by the Treasury indicates that they may well indeed have heard the call and are now ready to act, which is a much welcome step in the right direction.
What will the funeral cost and funeral plan review mean?
Although early days, it appears that the review will be a two pronged attack. Firstly the Competition and Markets Authority (CMA) will look at funeral costs in the UK; from funeral director’s charges to cremation fees, ensuring people get a fair deal when it comes to paying for a funeral; especially as cremation funerals now account for almost 75% of funerals taking place in the UK.
Speaking on behalf of the CMA, Daniel Gordon, director of markets recognised that arranging a funeral is a very emotionally vulnerable time, so it is extremely important that the process is made ‘as easy as possible’.
An interim report will be produced after 6 months providing initial findings on funeral costs with potential remedies with a further final report in a year’s time.
In addition to this invaluable work on funeral costs, the Treasury will also be conducting a prepaid funeral plan review, meaning tougher regulation for pre-paid funeral s and possible intervention and regulation by the Financial Conduct Authority.
Having said that, the Funeral Planning Authority (FPA) currently responsible for the regulation of a number of leading funeral plan providers commented that it was ‘confident the review would prove the effectiveness of its work’; and that ‘Regulation by others would lead to less choice, higher costs and "a less dedicated oversight of the market’, so we will see which way it goes over coming months.
Are funeral plans a good idea?
To date there are now 1.3 million funeral plans in existence and they are growing in popularity which can only be a good thing if it means people are putting plans in place to help their family.
At the end of the day, a funeral plan gives you the option to arrange and pay for your funeral services at today’s prices, avoiding future inflation and saving your family from the emotional stress of having to pay and arrange everything when the time comes. The points you need to be clear on when choosing the best funeral plan for you is what funeral services your plan does and most importantly doesn’t include and that the funeral plan provider you choose is a reputable one.
To be sure of the latter, it is always sensible to choose a company that is registered and therefore regulated by the Funeral Planning Authority.
The Funeral Planning Authority has a strict set of rules and code of practice as to how your money is handled and the service you receive. In order to become a registered member of the Funeral Planning Authority, funeral plan providers have to demonstrate that they comply with these rules; something they also need to prove on an ongoing basis by having to re-register annually.
Basically companies who are not registered with the Funeral Planning Authority have not had to prove they comply with these rules, so why take the risk?
Undoubtedly, both reviews will also focus on the rise of direct cremations and whether there is complete transparency on customer choice at the point of death and sale of prepaid direct funeral plans.
So a great day for the Funeral Planning market and the start of a reform that will ensure customers are protected going forward, funeral plans are regulated in the appropriate manner, funeral costs are completely transparent and who knows, possibly even a drop in the cost of a funeral – now wouldn’t that be nice.