The NAFD welcomes the announcement by HM Treasury (1 June 2019) that it intends to introduce statutory regulation to the funeral planning market. Around 200,000 funeral plans are bought by consumers each year and, given the negative impact of poorly sold funeral plans on both bereaved people and funeral directors trying to service the plans, this move will help to protect consumers from unscrupulous sales tactics and ensure that consumers can feel confident they are purchasing funeral plans that will cover the cost of the funeral they have chosen.
It’s particularly important that the new regulatory framework, which the Treasury says will now be developed by the Financial Conduct Authority, is suitable and proportionate for what is a very small, niche market with a very different kind of product to other financial markets. In particular, the NAFD would like the framework to ensure that funeral plan companies:
- communicate more clearly with the consumer regarding where and how funeral plan funds are invested;
- are transparent 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; and
- inform funeral directors 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.
You can read the announcement by HM Treasury here.
If you are considering buying a funeral plan and would like some guidance on questions to ask, please click here.