Save, make, understand money

Household Bills

Funeral market faces crackdown to prevent bereaved being ‘ripped off’

Paloma Kubiak
Written By:
Paloma Kubiak

Two separate reviews of the funeral sector have been announced today in a bid to protect the vulnerable and ensure bereaved families aren’t being ‘ripped off’.

The first, announced by the Treasury, will look at the pre-paid funeral plan sector which has seen sales rocket 245% between 2006 and 2017 to 207,000. Latest figures reveal there are over 1.3 million undrawn plans, equating to approximately £4bn in assets.

Pre-paid funeral providers don’t currently come under the scope of the Financial Conduct Authority (FCA). As such, the government is “minded to strengthen regulation in the sector by bringing all pre-paid funeral plans into the remit of the FCA”.

It wants to bring in tougher regulation for funeral plan providers as currently 95% of the sector (24 firms) is voluntarily regulated by the Funeral Planning Authority (FPA). But this self-regulatory body doesn’t have the power to prevent providers from trading and its code of practice isn’t legally binding.

Concerns have been raised by Citizens Advice Scotland and Fairer Finance that people at their most vulnerable were being pressured, harassed and misled by some pre-paid funeral providers.

As such, the Treasury has listed the following objectives for the sector:

  • all pre-paid funeral plan providers are subject to robust and enforceable conduct standards
  • there is enhanced oversight of providers’ “prudential soundness”
  • consumers have access to appropriate dispute resolution if things go wrong.

‘It breaks my heart that vulnerable are pressured into funeral plans’

John Glen, 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.”

The Funeral Planning Authority said it welcomes the consultation, but said: “In our view, the alternative regulation approaches suggested will result in a reduction in competition, and a less dedicated oversight of the market. This will impact negatively on customers, who will face increased costs, and far less choice.”

Review of funeral directors’ price and service

Separately, the Competition and Markets Authority (CMA) has launched a review into the £2bn funerals market to ensure people aren’t getting a bad deal.

The market study will look at whether the information provided by funeral directors (estimates suggest there are around 5,000 branches) on price and service is clear enough for people to choose the best option for them. It comes as the average cost of a funeral was nearly £3,800 in 2017, but extras can add £2,000 to the bill.

Cremations will also come under the scope of the review as they’re estimated to account for around 75% of all funerals. The CMA estimates there are around 294 crematoria currently in operation in the UK, with 106 of these privately operated and the remainder are owned and operated by local authorities.

Daniel Gordon, senior director of markets at the CMA, said: “People can understandably be very emotionally vulnerable when planning a funeral. We think it is important the process is made as easy as possible. We want to ensure people can at least receive clear information on prices and the services making up a funeral, and that people get a fair deal on the cremation fees charged.”