Are funeral plans safe?

Funeral plans are regulated by the Funeral Planning Authority (FPA) which was set up in 2002 instigated by HM Treasury.

It can be quite confusing when purchasing a prepaid funeral plan with other bodies and associations that various funeral directors and funeral plan providers are affiliated with but the Funeral Planning Authority or FPA as it is also known is the only organisation that regulates the sale of funeral plans, as the others are more focused on the quality of service the funeral director will provide, which is valid, but does not stipulate the way your money should be invested or provide any oversight of how your money is managed in the trust fund.

The Funeral Planning Authority has a strict set of Rules and Code of Practice that funeral plan providers have to demonstrate they operate to in order to be accepted, which is then tested on an annual basis when the companies have to apply for re-registration.  

How do funeral plans work?

Before understanding how funeral plans are regulated, you need to know how the plan works and what they do;

  • for an agreed sum of money you are purchasing your funeral services in advance at today' s prices
  • your money is invested in a trust fund (or an insurance policy for some plans) until the time comes
  • the trust fund is managed & audited independently from the plan provider 
  • the money isn't paid to the funeral director until the time of need

All these points ensure that your money is safe regardless of what happens to the funeral plan provider or the funeral director, as in the event of the funeral director going into liquidation your money will be reallocated to an alternative local funeral director.

At around £3,600 funeral plans are a significant purchase and so you want to be sure that when you purchase a plan, that your family will receive the services that you have paid for..

How are funeral plans regulated?

This extract is taken directly from the FPA's website:

The broad purpose is to help ensure that money paid by the consumer to a funeral plan provider for the purposes of providing a funeral in the future is kept safely, and is available when the time comes for delivery of the agreed funeral in accordance with the plan specification. 

The effect of the regulation is that those plans which are structured in accordance with certain statutory criteria, are excluded from direct financial regulation by the Financial Conduct Authority

The detail of regulation of funeral plans is contained in articles 59 & 60 of The Financial Services & Markets Act 2000(Regulated Activities) Order 2001 

The most important point here is that the Funeral Planning Authority's key role is to ensure that your money is protected and held in trust, regularly audited and reviewed by an actuary - whose job it is to ensure that your money is well managed and will be available to pay for your funeral in the years to come.

Funeral plan trade bodies

There are other organisations, trade bodies and associations that plan providers and funeral directors belong to, some have been in existence for many years whilst some are relatively new so their longevity is unknown.

It's not uncommon for funeral plan providers and funeral directors to be associated and or members with more than one body..

National Association of Funeral Directors (NAFD)

The NAFD is the largest trade association for the funeral sector and is not to be confused with the NFFD that only represents one funeral plan provider and a small number of funeral directors.

The National Associationof Funeral Directors represents the funeral industry and lobbies the government on its behalf for funeral directors and the bereaved. Their membership conducts over 470,000 funerals every year.

It is an industry leader and sets high standards for the industry through a code of practice.

National Association of Allied & Independent Funeral Directors (SAIF)

The NationalSociety of Allied and Independent Funeral Directors (SAIF) is a trade association whose members are all independent funeral directors and was established in 1989.

They have over 860 members across 1,500 sites in the UK, plus they have over 100 associate members who supply products and services to the funeral profession.

Their primary objective is to promote and protect the interests of independent funeral directors.

National Association for Prepaid Funeral Plans (NAPFP)

The National Associationfor Prepaid Funeral Plans was established in 1993 and was instrumental in setting up the Funeral Planning Authority in 2002.

Members of the NAPFP are also funeral plan providers regulated by the FPA. Its Code of Practice for pre-paid funeral plans is to protect consumers who purchase prepaid plans and was drawn up in consultation with the Office of Fair Trading.

National Federation of Funeral Directors (NFFD)

The National Federation of Funeral Directors is a trade body and was set up in 2010. Safe Hands Funeral Plans work in partnership with the NFFD and is the only funeral plan provider endorsed by them.

The aims of this trade body is to increase funeral cost transparency and consumer choice.

So how secure are funeral plans?

Our advice is to ensure that your funeral plan provider is registered and regulated by the Funeral Planning Authority (FPA), as they are the only organisation focused on how your money is protected. The funeral plan provider has to demonstrate that they operate to the high standards required by the FPA’s Rules and Code of Conduct; maintain this level on an ongoing basis by having to re-register on an annual basis and carry out independent annual audits.

The following companies are registered with the FPA: 

  • The Coop
  • Dignity 
  • Golden Charter 
  • Avalon 
  • Funeral Planning Services 
  • Golden Leaves 
  • Perfect Choice 
  • Family Funeral Trust 
  • Funeral Partners (Choice) 
  • AgeUK

By placing your plan with an FPA registered provider your plan will automatically be placed with a funeral director (you can also nominate your choice) who is member of the NAFD and or SAIF member so you can be sure of the highest standards when the time comes. 

With all FPA plan providers your local funeral director will be stated in your plan documentation as they will have already accepted your plan from the plan provider. 

You can compare funeral plan providers and plans on our site.

Compare funeral plan providers

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