New rules for funeral plan providers including cold-calling ban
The Financial Conduct Authority (FCA) said it hopes the new rules will raise standards in the funeral plans market.
Funeral plan products allow people to pre-pay for their funeral, generally for a fixed cost, so relatives do not have to pick up the bill. Plans can be sold by an intermediary such as a funeral director or financial adviser, or directly by a provider.
The FCA will start regulating the funeral plans sector from 29 July 2022, the date the new rules come into force.
The sector has faced criticism in recent years for selling expensive plans that don’t always cover the cost of a funeral.
Under the new measures, firms offering funeral plan instalments will be banned from cold-calling customers and new standards on advertising will be implemented to ensure plans are sold fairly.
Intermediaries will no longer be able to receive commission for selling plans and products will always have to deliver a funeral, with the FCA banning companies that don’t guarantee this.
Sheldon Mills, executive director, consumers and competition at the FCA, said: “Funeral plans should provide customers with comfort and certainty that their affairs are in order.
“Our new rules for the sector will drive up standards and ensure that when consumers buy a plan, they receive a product that matches their needs and expectations.”
Nicholas Hill, senior advice manager at the Money and Pensions Service (MaPS) said: “We welcome the FCA’s measures to ensure that the funeral plan market is regulated, accountable and provides consumers with good value.
“These changes will come into place in 2022, so in the meantime we strongly urge people to review what they should look for in a plan before making a decision, and to be wary of any cold callers trying to sell them a plan.”
From next summer, funeral plan customers will be able to use the Financial Services Compensation Scheme or make a complaint to the Financial Ombudsman Service if things go wrong.