FCA to regulate pre-paid funeral plans

As part of this, the regulator has introduced new rules. Taking effect from today, those in the market will be banned from cold calling, as well as a ban on commission payments to intermediaries.

Additionally, a requirement has been brought for a funeral plan to deliver a funeral unless the customer dies within two years of taking out the plan, in which case a full refund will be offered. As part of this, customers of authorised providers will now have access to the Financial Services Compensation Scheme (FSCS).

Consumers can also make a complaint to the Financial Ombudsman Service (FOS). This is even the case if the issue they are complaining about happened before July 2022, but only if the firm was registered with the Funeral Planning Authority at the time the issue occurred.  

The FCA has also authorised 26 providers, who together hold approximately 1.6 million plans and make up 87% of the market. 

13 firms that applied before 1 March 2022 have, however, not been authorised, and have until 31 October 2022 to transfer their plans to authorised firms or refund their customers. These plans are not covered by FCA regulation, meaning there is no protection by the FOS and FSCS until they’re transferred to authorised providers.

Funeral plan providers will also fall under consumer duty rules, which the regulator confirmed plans for earlier this week, when it comes into force. This will mean their customers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.