Considering a funeral plan? Wait before you buy as the watchdog is trying to clean things up, says JEFF PRESTRIDGE
Although I am not a fan of the Financial Conduct Authority, its regulation of the pre-paid funerals market cannot come soon enough. It’s a market awash with rats and scoundrels that need driving out.
In theory, funeral plans make financial sense. You pay upfront for your own funeral that hopefully will not take place for many years to come.
In buying now, you safeguard yourself against rising funeral prices – and it means there is one less issue for family and loved ones to deal with when your time on Mother Earth is finally up.
Sadly, theory does not always translate into practice – and I’m not a lone voice in saying this.
Concern: People who buy funeral plans are not around to measure delivery against their expectations
It’s a view shared by many experts, including consumer champion James Daley, who has long called for the sector to come under the regulator’s wing.
‘People who buy funeral plans are not around to measure delivery against their expectations,’ he says. ‘This is why it’s so important there are clear rules around how companies behave.
‘And – with most plans costing over £3,000 – it’s key that customers have total confidence that their money is safe.’
Arthur Weiss, a business consultant, agrees. He has looked at the sector on and off over the years.
Last week, he gave me his emphatic opinion: ‘Funeral plans are an easy way to make money for scammers as you promise something that hopefully won’t need to be paid out for several years. There is no guarantee that what is promised is eventually delivered.’
The regulator is currently vetting those companies that operate in the funeral plans market. Only providers that get authorised will be allowed to continue in business beyond the end of July.
Funeral plans are an easy way to make money for scammers as you promise something that hopefully won’t need to be paid out for several years
Business consultant Arthur Weiss
So far, not one company has got the FCA’s badge of approval, although that should not alarm those who have bought plans.
As the regulator told me, authorisations will probably not be granted until close to July 29 when it starts overseeing the sector.
Yet there has already been fallout. Last month, Wakefield based Safe Hands Funeral Plans ‘withdrew’ its application to be authorised and said it would be doing ‘everything possible’ to ensure that customers’ funeral plans would be honoured after July 29 ‘under a new plan manager’.
Last week, I asked Safe Hands for an update. Had it identified a provider to take over its plans? And for those wanting to cancel their plans, what was the exit charge?
Was it £395 or £495 as some clients have told me (both unacceptable)? At the second time of asking, I received an unhelpful ‘no comment’.
Eternal Peace Funeral Plans, based in Bridlington, East Yorkshire, is another provider to have withdrawn its application.
Last week, director Raymond Gainey assured me its application ‘would be put back in over the coming weeks’.
He added: ‘The application was sent in, but still needed a lot of work to comply with the FCA. It was better to withdraw and resubmit once we have finished the necessary work on the application.’
I also asked him about the money from customers that according to its literature is held in a trust fund overseen by Quantum Trustees. ‘Is it possible to see the latest report on the assets held inside this fund,’ I asked.
Other providers such as Golden Charter make this information available to customers on their websites. Silence, despite three requests.
A dig around Companies House makes for disconcerting reading. Latest accounts for Eternal Peace show the business has assets of just £10.
And as one adviser who has had past dealings with Safe Hands told me last week, one of the main drivers behind Eternal Peace previously worked at Safe Hands.
The regulator has advised consumers not to ‘buy a new funeral plan’ from Safe Hands. It has yet to do so for Eternal Peace. Caveat emptor.