Background to and discussion of the Bill, which would implement changes to the regulation of financial services arising from the UK's departure from the EU.
What is a funeral plan?
Pre-paid funeral plans involve paying money either by instalment or by lump sum to a funeral plan provider, which invests the money into an insurance policy or an independent trust fund.
Conditions may vary, but generally the plan should cover the cost of a funeral. It is likely also to fulfil the plan holder’s final wishes for the arrangement of the funeral.
Funeral Planning Authority
The current industry-established regulator of funeral plan providers is the Funeral Planning Authority (FPA). Not all funeral plan providers are registered with the FPA. There is a list at: Funeral Planning Authority, Prepaid funeral plan providers.
Registered members must follow the FPA’s Rules and Code of Practice.
Financial Conduct Authority
From 29 July 2022, the Financial Conduct Authority (FCA) will start to regulate firms that provide and arrange pre-paid funeral plans.
Providers must apply to the FCA for authorisation; the website publishes a list showing the status of each provider. There is also a list of existing providers who will not be applying for authorisation or have withdrawn their applications: providers who will not be authorised.
The FCA states that:
From 29 July 2022, any funeral plan provider that isn’t authorised by us will be committing a criminal offence if it attempts to sell or administer a funeral plan contract. That means it won’t be able to deliver the service you have paid for.
Once the FCA becomes the regulator, complaints may be referred to the Financial Ombudsman Service. This is also the case for issues before that date, so long as the provider was registered with the Funeral Planning Authority at the time the issue occurred. The FCA also states:
We want to make sure that you have access to the Financial Services Compensation Scheme (FSCS) from the first day of regulation, so your money is protected if the firm fails.
The FCA will introduce a range of measures to protect the consumer, including a ban on cold calling unless the firm has an existing relationship with the consumer.
Collapse of Safe Hands Plans Limited
Safe Hands Plans went into Administration in March 2022, having withdrawn its application for FCA authorisation in February. Safe Hands was at one time registered with the Funeral Planning Authority but is no longer included in the FPA list of Prepaid funeral plan providers.
it is understood that the Company had approximately 46,000 plan holders at the point of entering Administration.
Since funeral plans are not currently within the Ombudsman’s jurisdiction, as described above, the Ombudsman is unable to help holders of Safe Hands Plans Limited.
The main source of information is provided by the Joint Administrators, who are likely to be the most useful source of further information and advice for the time being: Safe Hands Plans Limited in Administration.
Some of this information is summarised below, but it may change at short notice and should be checked regularly.
The FAQs include the following points:
How much money can I expect back? When can I expect this?
The Administrators are unable to confirm any potential estimated return to plan holders at this time.
The Administrators estimate that the process of realising assets and issuing partial repayments to plan holders is a significant undertaking and would, therefore, take some time to complete. To confirm, it is understood that the Company had approximately 46,000 plan holders at the point of entering Administration.
Updates will, however, be provided to customers on a periodic basis via the Company’s website www.safehandsplans.co.uk and in the Administrators’ future reports to creditors.
How can I make a claim?
The Joint Administrators will contact plan holders directly in due course should it be necessary for you to make a claim and will provide details of how to make a claim and what you can claim for.
The FAQs note the following potential interim route to compensation:
Plan holders that have paid an element of their funeral plan instalments via a credit card may be entitled to register a claim with their credit card provider under s75 of the Consumer Credit Act 1974.
Support from Dignity plc
A recent House of Commons adjournment debate led by Margaret Ferrier outlined the support offered by Dignity plc, “one of the UK’s largest providers of plans”:
Dignity has put a plan to the administrators which would allow them to step up and cover some of the shortfall left by Safe Hands, providing immediate support where it is needed most urgently, and planning to work with other customers and their families in the longer term to find solutions that will not leave customers with nothing in place.
[Safe Hands Funeral Plans, HC Deb c378-86, 12 May 2022]
In responding to the debate the Economic Secretary to the Treasury, John Glen, expressed his gratitude to Dignity for stepping in “to provide funerals on behalf of Safe Hands’ customers in the immediate period after the firm entered into administration” and agreeing to do that “for a further six months”.
Advisers split on funeral plans coming under FCA remit, FT Adviser, May 2022
Savers in safe hands funeral plan will only get a fifth of their money back at most, This is Money, 22 May 2022
Funeral plans: government urged to set up fund for victims of failed providers, The Guardian, 14 May 2022
Regulation of pre-paid funeral plans – the role of the Financial Services Compensation Scheme where a regulated funeral plan provider fails: Response to the consultation and additional provisions, HM Treasury, April 2022
Funeral plans, Financial Conduct Authority, February 2022
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