Tougher regulations for pre-paid funeral plan providers

Posted: 07/06/2018

It has been announced earlier this month (June) that the Treasury is intended to enforce stricter rules for pre-paid funeral plan providers by making the sector come under the regulatory power of the Financial Conduct Authority. At the same time as this is taking place, the Competition and Markets Authority has launched a study looking at the supply of funerals in the UK. The government is intending to launch a consultation on the sector to ensure that the most vulnerable in the UK are not being pressured or misled into getting a pre-paid funeral plan. Perfect Funeral Plans takes a closer look at this recent news and what it will mean for you.

Higher standards for the funeral plan sector

In recent years the funeral plan sector has experienced a significantly increased demand. In fact, according to between the years of 2006 and 2017, sales for funeral plans have increased by a staggering 245%.

However, whilst funeral plans have grown in popularity and still remain an important product, helping to overall decrease the cost of funerals considerably, there haven’t been any regulatory changes to the sector since 2001, despite its rise. With so many companies coming appearing during this time frame, and with so much money at stake for customers who take out a pre-paid funeral plan (most plans tend to cost at least £3,000) it is becoming more important than ever to ensure that customer can have complete confidence that the money they are investing is in safe hands, and to prevent the elderly and other vulnerable people from being taken advantage of by some illegitimate funeral businesses.


Changing voluntary regulations


The pre-paid funeral plan sector is currently only regulated (on a voluntary basis by the company in question) by the Funeral Planning Authority. However, there are plans to change it so that is regulated by the FCA.

As it stands, the funeral plan sector is not directly supervised by the Financial Conduct Authority. There is often confusion about this as many funeral plan providers (in fact, over 95% of companies in the UK) are voluntarily regulated by the Funeral Planning Authority (FPA). Nevertheless, there is an important caveat to this, as the FPA does not actually have the power to stop funeral plan providers from trading if their practices are less than fair or are ripping people off. Furthermore, their code of practice is not legally binding.

Whilst it is important to remember that the large majority of funeral plan providers are legitimate and do adhere to fair standards for their customers, the government strongly believes that tougher standards need to be implemented across the board so that in the event that something was to go wrong with a funeral plan provider, individuals are still protected and do not lose the money that they have invested.

In addition, another reason as to why the government would like to have tougher, more robust standards for this sector is due to the fact that pre-paid funeral plans have many of the same characteristics as other financial products that are available to consumers (for example, insurance products) which are strictly regulated, and therefore it is felt that the funeral plan industry should have to adhere to the same regulations. If regulated by the Financial Conduct Authority, it will have greater power to punish abuses in the sector, which it is currently not able to do.


The Competition and Markets Authority investigation

As previously mentioned at the beginning of this article, the Competition and Markets Authority (CMA) has also recently launched its own investigation into the funeral sector, as a result of a number of consumer groups who have argued that some people who take out pre-paid funeral plans with certain companies may not end up saving money at all, but instead find that upon their death, grieving loved ones will have to incur additional funeral costs.  In some cases, this could lead to family members having to pay alarmingly more, with this sometimes being up to an extra £2,000. At an already stressful and emotional time for the bereaved, it is easy to understand how this is extremely unfair.

The CMA investigation does not look specifically at the pre-paid funerals sector (as a result of the recent news of the Treasury’s own separate action) but rather it will be reviewing the overall funeral costs people pay, in order to ensure that people are receiving a fair deal and have been provided clear information on prices and services (including what exactly they will receive in the funeral plan that they have taken out, as part of the problem currently with certain pre-paid funeral plan providers is that the customers are unaware that some costs aren’t covered in the plan, such as burial plots, a wake, embalming or limousines).

The cost of funerals


The cost of the average funeral in the UK has risen dramatically in the past decade.

Over the past decade, the cost of funerals has risen exponentially. These days, a funeral in 2017 is expected to cost nearly £3,800. In this section, we take a look at what the typical costs are for each part of the funeral, based on current estimates.

  • The internment fee (grave-digging) can cost anything between £150 and £1,734.
  • The price of a burial plot ranging from £280 to a staggering £5,000, depending on which area of the country it is.
  • The cost of a stone memorial may range from £800 all the way up to £1,200, sometimes more
  • Moving the deceased to the Chapel of Rest will cost an estimated £999
  • The price of a coffin can be between £275 and £1,500
  • The officiant fee or minister for a funeral tends to cost around £150
  • Hiring a funeral director will cost an estimated £1,000 to £1,500 for a funeral
  • If you choose to embalm as an additional extra, this can cost between £136 up to £165 on average
  • Catering for a funeral or wake can cost up to £400
  • The price of hiring a chauffeur and a limousine will be an estimated £300
  • Flowers for the funeral cost on average £150