The remit of the Financial Conduct Authority (FCA) has certainly increased significantly in recent years. Now the Government is proposing to add the pre-paid funeral plan sector to the areas which the FCA will regulate. The proposals also advocate bringing the sector under the jurisdiction of the Financial Ombudsman Service.
The Government press release says that the proposals are designed “to stop grieving families from being ripped off.”
At present, the sector is subject to voluntary regulation by the Funeral Planning Authority (FPA), and around 95% of the sector has signed up to its Code of Practice and its Rules. However, the Government notes that the FPA does not have the power to stop an errant firm from trading – it can merely suspend the firm’s membership of the Association, or impose a fine of no more than £5,000, and these powers have never actually been used.
The press release also makes reference to research conducted by Citizens Advice Scotland and by Fairer Finance – a consumer group that seeks to deliver a fairer financial services market for consumers – and says that this has shown that “people at their most vulnerable are being pressured, harassed and misled by some pre-paid funeral plan providers.”
John Glen MP, Economic Secretary to the Treasury said:
“I’m appalled by the lengths that some dishonest salesmen have gone to in order to sell a funeral plan. It breaks my heart to think that our oldest and most vulnerable are being pressured into funeral plans that leaves their grieving families out of pocket.
“There are thousands of pre-paid funeral plans bought each year, and most providers are fair and legitimate. But tougher regulation will ensure robust standards are enforced for all plan providers and protect individuals and their families if things go wrong.”
James Daley, Managing Director of Fairer Finance, said:
“Funeral plans are an important and valuable product, and we hope regulation of this sector will give responsible companies the chance to thrive and give consumers the necessary reassurances they need to buy in confidence.”
The FPA says that it “welcomes the government consultation into the regulation of funeral plans”. However, it opposes FCA regulation, suggesting that this will reduce competition and increase costs for customers. Instead, it is calling for the Government to make it compulsory for funeral plan providers to register with the FPA, instead of the current voluntary regime. In its earlier response to the Fairer Finance study, the Association noted that the conduct of FPA members was found to be much better than that of the firms who did not sign up to its voluntary Code.
The consultation closes on August 1.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article