Today (26 April 2018), the NAFD welcomed the second Fairer Finance report into how the sale of funeral plans should be regulated, having been involved in shaping its findings, and set out the Association’s preferred options for the future regulation of the sector.
In launching the report, which was sponsored by Co-op Funeralcare, Dignity, Ecclesiastical and Golden Charter, James Daly of Fairer Finance said: “There is not enough protection for customers buying pre-paid funeral plans. These products can cost several thousand pounds and, crucially, the customer won’t be around to see whether the promises made to them have been kept. We’re concerned that a small but significant minority of businesses in this sector are taking too much in commission and administration fees and may not be putting enough aside to keep the promises they have made to customers.
“We’d like to see the Government acting swiftly to introduce regulation so that consumers are properly protected when they buy a funeral plan. And, in the meantime, the Financial Conduct Authority needs to be doing much more to police those companies who do not meet the legal requirements to remain exempt from regulation.”
In its response, the NAFD expressed its agreement with Fairer Finance’s urgent call for tighter regulation of funeral plan sales, and its concern that agents acting for less scrupulous funeral plan companies were subjecting consumers to pressure selling tactics, leading to vulnerable people buying funeral plans that would not adequately cover the costs of their chosen funeral.
The NAFD has also said that it would also like to see:-
- a requirement for clearer communication with the consumer regarding where and how funeral plan funds are invested;
- complete transparency regarding the value of any fees and sales commissions attached to the plan. This must include ensuring the consumer understands how much of their payment remains in the funeral plan after the deduction of commission and charges;
- a requirement for funeral directors to be informed by plan providers when a plan is being sold with their name against it as nominated funeral director. The funeral director must have an opportunity to agree the terms and their decision be confirmed to the family before the standard ‘cooling off’ period ends.
The NAFD shares Fairer Finance’s view of the important role played by the Funeral Planning Authority (FPA) in setting standards for funeral plan companies and has noted the Funeral Planning Authority’s considerable efforts to increase the number of funeral plan providers that are subject to FPA scrutiny and its willingness to use the significant powers that it already possesses to censure any plan provider that steps out of line.
The NAFD believes that the development of regulatory standards that are suitable and proportionate for funeral plans is the best way to ensure that consumers have access to expertise, guidance and choice when they wish to pre-arrange their funeral. The NAFD would, therefore, like to see introduction of statutory regulation to the funeral planning market and would like to see these new powers conferred upon the Funeral Planning Authority to add strength and weight to its current voluntary standards regime.
NAFD President, Alison Crake, said: “We believe the FPA is the right organisation to lead the regulation of the funeral plan market. The funeral plan market is tiny compared to other financial goods and services such as insurance, investments and savings, which the Financial Conduct Authority rightly focuses its regulatory attention upon.
“A more robust regulatory regime, operated by the FPA, would ensure that funeral plan providers can be regulated effectively and proportionately, by a focused and accountable regulatory body which already has extensive market experience, has reshaped its governance to enable it to add in a truly independent manner and has the buy-in of a significant percentage of funeral plan providers. By conferring statutory powers upon the FPA, all funeral plan providers, not just those who volunteer to abide by high standards, will be compelled to meet the high standards of operation and accountability that consumers have a right to expect.”