Once pre-paid funeral plans come under our regulation next July, customers will be protected if their authorised plan provider fails.
Our new rules[1] will provide continuity for customers where their plan provider fails, by allowing plans to be transferred to a new provider on the same terms as the original contract. The rules will also ensure that consumers can receive compensation from their firm if a transfer to another provider is not possible.
Where a regulated provider fails and the Financial Services Compensation Scheme (FSCS)[2] is involved, our rules also allow the FSCS to arrange continuity of funeral contracts or pay cash compensation to customers as appropriate.
The new rules will apply from 29 July 2022, when we take on responsibility for regulating and supervising the pre-paid funeral plans market. Our FSCS rules are dependent on the Government’s proposed funeral plans legislation. We will make them final at the earliest possible opportunity.
We have also provided further guidance to clarify some issues for trustees of funeral plan trusts, insurers and faith bodies.
These rules are in addition to measures we've already introduced[3] to enhance consumer protection from 29 July 2022:
- banning cold calling and setting new standards on advertising to ensure plans are sold fairly
- banning commission payments to intermediaries, such as funeral directors, to ensure products represent fair value
- carrying out full checks on the fitness to operate of those selling funeral plans, in order to improve governance standards and oversight
- guaranteeing that funeral plans will always deliver a funeral unless the customer dies within 2 years of taking out the plan, in which case a full refund will be offered
- guaranteeing that customers will receive a full refund if they cancel a plan within 30 days of purchase, or pay only a reasonable charge later on
To gain approval to operate in the regulated market, firms will be subject to rigorous assessment against our standards.
Information for consumers
Consumers who are considering purchasing a pre-paid funeral plan[4] before our regulation starts should look into their options carefully to decide whether the product is right for them.
Customers won't know yet if their plan provider will be authorised by us. Until our regulation comes into effect on 29 July 2022, they can't make a complaint to the Financial Ombudsman Service[5] or make a claim to the FSCS. If their plan provider fails, their money won't be protected, and they may not get all of it back.
To help new and existing funeral plan customers understand their position, we've published a list of all known funeral plan providers[6] and the status of their applications for authorisation.
If an existing customer has any concerns relating to their funeral plan product, they should get in touch with their firm to ask whether it intends to seek FCA regulation, and what will happen to their funeral plan. If the firm is a member of the Funeral Planning Authority (FPA), existing customers can also speak to the FPA about their firm.
Firms must prepare now for regulation
Applications for authorisation for firms intending to remain in the market after 29 July 2022 opened on 1 September 2021. Firms intending to apply for authorisation[7] should do so as soon as possible.
Firms that don't intend to apply for authorisation should stop selling new plans and should prepare to transfer their existing books of business or wind down in an orderly way before our regulation starts.