The Financial Conduct Authority (FCA) has revealed its measures on how it will regulate advice on funeral plans, including a ban on commission payments and changes to appointed representative permissions.
The rules will commence on 29th July 2022 when funeral plan providers come under regulation from 29th July 2022.
The new rules will introduce high standards in the funeral plans market and require firms to ensure that plans are sold fairly, perform as expected and provide value for money.
These rules mean that funeral instalment plan products will always deliver a funeral (after a moratorium period) as we will be banning those that don’t guarantee this. Cold calling will be banned and new standards on advertising will be implemented to ensure plans are sold fairly
commission payments to intermediaries will be banned to ensure products represent fair value and that those selling funeral plans are subject to full checks on their fitness to operate to improve governance standards and oversight.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA commented on the new rules “Funeral plans should provide customers with comfort and certainty that their affairs are in order.”
“Our new rules for the sector will drive up standards and ensure that when consumers buy a plan, they receive a product that matches their needs and expectations. We are banning all commission payments to intermediaries to make sure products offer fair value, and, having seen the real harm cold calling can cause consumers, we’ll be banning it.”
“As we take over the regulation for this market, we will be rigorously assessing firm’s fitness to operate. Firms must now plan for this new regulatory regime or prepare to leave the market in an orderly manner.”
Nicholas Hill, Senior Advice Manager at the Money and Pensions Service (MaPS) said “We welcome the FCA’s measures to ensure that the funeral plan market is regulated, accountable and provides consumers with good value.”
“These changes will come into place in 2022, so in the meantime we strongly urge people to review what they should look for in a plan before making a decision, and to be wary of any cold callers trying to sell them a plan. For more information about your options, you can access guides about funeral plans on our new MoneyHelper website.”
Sarah Coles, Personal Finance Analyst, Hargreaves Lansdown said “There’s no point planning your funeral unless you’ve planned how to pay for it too. However, just because the FCA is set to regulate funeral plans next year, don’t assume this is the best option for you.”
“The average funeral costs over £9,000 and even if you have a basic send-off it’ll set you back an average of over £4,000, so while you’re weighing up the guest list and the music choices, you also need to consider how your family will cover the cost.”
“An estimated 1.4 million people have bought funeral plans, paid for in advance, in the expectation they will cover the cost of the send-off. Unfortunately, according to Citizens Advice Scotland and Fairer Finance, the unregulated market has been home to some expensive plans that aren’t guaranteed to cover the cost at all. There are also plans that add in expensive fees and commission payments, so that hundreds of pounds that you thought was being put aside for your funeral is actually lining the pockets of salespeople.”