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Pre-Paid Funeral Plan Protection Overview:
- Who: The Financial Conduct Authority announced that new regulations will start protecting consumers with pre-paid funeral plans in 2022.
- Why: Starting July 2022, the regulatory body will allow plans to be transferred to another provider for the same terms and costs when the initial provider fails.
- Where: The regulation covers consumers in the United Kingdom.
Pre-paid funeral plan purchasers can look forward to additional protection by their financial regulatory body after new rules are put in place in July 2022.
The Financial Conduct Authority (FCA) announced the new rules that will provide continuity for customers when their pre-paid funeral plan provider fails, by allowing plans to be transferred to a new provider on the same terms as the original contract.
The rules will also ensure that consumers can receive compensation from their firm if a transfer of their pre-paid funeral plan to another provider is not possible, the FCA says. The rules also allow for the Financial Services Compensation Scheme to arrange continuity of funeral contracts or pay out cash to customers when a provider fails.
The new rules will apply from 29 July 2022, when the FCA takes responsibility for regulating and supervising the pre-paid funeral plans market. The FSCS rules are dependent on the Government’s proposed funeral plans legislation, the regulatory body said.
New Pre-Paid Funeral Plan Protections
FCA rules to protect consumers planning funerals also include banning cold calling and setting new standards on advertising; banning commission payments to intermediaries, such as funeral directors; carrying out full checks on the fitness to operate of those selling funeral plans; guaranteeing that funeral plans will always deliver a funeral unless the customer dies within 2 years of taking out the plan, in which case a full refund will be offered; and guaranteeing that customers will receive a full refund if they cancel a plan within 30 days of purchase.
The FCA has published a list of all known funeral plan providers and the status of their applications for authorization under its new rules to guide consumers making decisions on plan providers.
The agency urged consumers who are considering purchasing a pre-paid funeral plan before the regulation starts to look into their options carefully, saying customers won’t know if their plan provider will be authorised until the regulation comes into effect in July 2022.
“If their plan provider fails, their money won’t be protected, and they may not get all of it back.”
It added that if an existing customer has any concerns relating to their funeral plan, they should get in touch with their firm to ask whether it intends to seek FCA regulation, and what will happen to their funeral plan.
At the height of the pandemic, the FCA scored a win for consumers after it brought a lawsuit against eight insurers to force a ruling on business interruption claims: more than half of companies that filed valid business interruption claims due to the pandemic had already had a payout from their insurance companies by June.
Earlier this year, the FCA reported that insurance companies paid out £636.7 million in full settlements, plus another £308.8 million in interim payments, to policyholders for business interruption since January.
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