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In the spotlight: The future of funeral planning

  • Publish Date: Posted almost 3 years ago
  • Author:by MERJE

A consultation has been launched by the Financial Conduct Authority (FCA) around how, as of July 2022, it intends to regulate the pre-paid funeral plans sector. 

This follows a legislative move by the Treasury earlier this year in which it brought the sale and administration of funeral plans within the FCA’s remit.

This course of action followed concerns raised in the mainstream media and by consumer groups about the conduct and financial soundness of some pre-paid funeral plan providers.

The consultation lays out how the FCA will seek to improve standards in the sector, which is a decision that we at MERJE support wholeheartedly.

This is because pre-paid funeral plans provide an effective means to help people and their families easily manage, navigate and absorb the costs of a funeral during what is always a difficult and emotional time. 

This is why it’s so important for people to have the confidence, especially when they might be feeling particularly vulnerable, that their chosen plan will deliver the funeral they expect for a loved one at a fair value.  

To that end, it’s imperative that all firms in this industry prepare now in order to be ready for its introduction to financial services regulation.

In fact, at MERJE we have a team of skilled recruiters who are well-versed in this new area of regulation and are able to help you find the right professionals to support your business in navigating the changes, as and when you require it.

In recent months, we have recruited several senior level positions in the funeral planning industry, including Heads of Compliance, Heads of Regulatory Risk & Compliance and Heads of Regulation.

These include Melissa Fothergill, a Head of Compliance in this arena, who says of the legislation changes: “The regulation of the funeral plan market is welcomed by the majority of providers, with many sound firms already adhering to the code of conduct set out by the Funeral Planning Authority. This will set them up well for the FCA’s regime.  

“However, the timescales set out by the FCA will be challenging for most firms to meet and ensuring a competent Compliance professional is in situ to assist not only with the application, but supporting documentation which is needed, is critical. Ensuring customers are at the heart of any business model is critical and it’s hoped that some firms which do not display these ethics will exit the market. 

“In my opinion, MERJE is the market leader in ensuring that the candidate and firm work well together. This is integral for any Compliance project but none more so than a full FCA application and the complexities this brings! I have been placed with a firm that is dedicated to ensuring they succeed in their FCA authorisation and ongoing FCA requirements.  This is down to MERJE fully understanding how important this is for my own professional integrity.   

“The landscape within the funeral planning market will inevitably change over the coming months and now is the time to seek help and support from experienced Compliance professionals.”

Read on to learn more about the full scope of the FCA's plans

The FCA’s proposals intend to ensure that:

  • Products meet the individual needs of consumers. To that end, it will ban the sale of products which do not provide for funeral services in almost all circumstances on the individual's death

  • Plans are sold fairly, including a ban on cold-calling to prevent consumers being pushed into taking out plans which may not be right for them

  • The prices of plans are fairly valued, with firms stopped from using additional fees to drive profits and a ban on commission payments to intermediaries

  • Consumers have access to the Financial Services Compensation Scheme and Financial Ombudsman Service from day one, should things go wrong.

How organisations can prepare

Over the coming months, the FCA will provide a range of guidance to assist firms in preparing applications and getting ready to be regulated.  

They will need to:

  • Apply directly to the FCA for authorisation from September 2021 or, if appropriate, submit notification to become an Appointed Representative

  • Apply as soon as possible after the application gateway opens in September 2021. Applications made after November 1, 2021 may incur a higher application fee

  • Ensure they meet FCA standards to be authorised and, once authorised, follow the watchdog’s rules

  • Pay an application fee and then annual fees, based on turnover.

Funeral plan providers who cannot meet the FCA’s standards or those which are not authorised before July 2022, are expected to cease trading in relation to funeral plans. This should take place before FCA regulation takes effect. Carrying on regulated business without authorisation after rules take effect will be a criminal offence.

The FCA anticipates that the Funeral Planning Authority will continue to regulate providers of pre-paid funeral plans registered with them until FCA regulation begins next year.

If your business is affected by this change in legislation and you would like to receive further advice or guidance, please get in touch with the MERJE team: