Regulation of Funeral Plans – FCA launches consultation

On 2 March 2021 the Financial Conduct Authority (FCA) published its Consultation Paper –‘CP21/4 – Funeral Plans: Proposed approach to regulation’.

Prompted by concerns raised by consumer groups – and amplified by media coverage – HM Treasury made legislation in January which will bring the sale and administration of funeral plans within the FCA’s remit from July 2022.

The proposals put forward in CP21/4 are aimed at improving standards in the sector by ensuring that:

  • products meet the individual needs of consumers – the sale of products which do not provide for funeral services in almost all circumstances on the individual’s death will be banned
  • plans are sold fairly – this will include a ban on cold-calling to prevent consumers being pushed into taking out plans which may not be right for them
  • the prices of plans are fairly valued – firms will be prevented from using additional fees to drive profits, and commission payments to intermediaries will be banned
  • consumers have access to the Financial Services Compensation Scheme and Financial Ombudsman Service – from day one, should things go wrong

The consultation paper is primarily aimed at:

  • firms that sell or carry out funeral plan contracts for funerals in the UK
  • investment advisers who provide advice on funeral plan contracts
  • insurance firms who provide life insurance policies that back some funeral plans
  • trustees of trusts and discretionary investment managers which manage the assets of trusts that back some funeral plans
  • trade bodies representing firms that carry out or sell funeral plan contracts, including those representing funeral directors

All firms carrying out activities relating to funeral plan business will need to be FCA-authorised by 29 July 2022 and from that date the Financial Ombudsman Service will take responsibility for resolving disputes involving funeral plans.

The consultation period ends on 13 April 2021 and the FCA is urging those involved in the sector to engage with the process and to lose no time in starting to prepare for statutory regulation. Firms already under the FCA’s umbrella will testify that the authorisation process, associated preparations and subsequent compliance with the regulations require a not insignificant investment of time, energy and, often, money.

You can access the FCA consultation here.


Richard Galley

Director of Learning