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Funeral firm collapse leaves 46,000 customers in the dark

Written by: Emma Lunn
Safe Hands has appointed administrators who say the firm can’t honour any funerals for its plan holders – and there’s no guarantee they will get their money back either.

Safe Hands had about 46,000 customers who had either paid for their funerals upfront or were doing so in instalments. The idea of a funeral plan is that when you die, your funeral is fully paid for and your relatives won’t have to pay for it.

Safe Hands had already stated its intention to exit the market. The funeral plan market is currently unregulated but from July, firms selling funeral plans will need to be regulated by the Financial Conduct Authority (FCA). Safe Hands withdrew its application to the FCA last month, prompting the regulator to warn customers not to buy a funeral plan from the company.

Now that Safe Hands has ceased trading, customers who had already purchased funeral plans face a fight to get their money back. The Financial Services Compensation Scheme (FSCS) doesn’t provide protection for customers of funeral plan providers if the company goes bust.

Safe Hands appointed FRP Advisory Trading Limited as administrators yesterday. Customers with Safe Hands funeral plans have been advised to register a claim with the administrators.

FRP said Safe Hands will be assisting current plan holders with contingency funeral planning services, for the next two weeks only, with the assistance of rival funeral plan provider Dignity. But after the next fortnight, the administrators said it’s “uncertain” as to whether funeral plans will be able to be fulfilled.

FRP said all plan holders should consider their funeral plan with the Safe Hands to have been terminated with immediate effect. This includes funeral plans that were part-paid and funeral plans that were being processed. No further direct debit or standing order instalments will be collected by the company.

The administrators are exploring the possibility of transferring funeral plans to an alternative provider and will update customers on this in due course.

Safe Hands customers hoping to get an immediate refund will be in for a shock. Despite customers were told their money was being held in a trust by Safe Hands, the administrators have discovered a shortfall between the level of plan holder investments and the forecast level of funeral plan costs to be paid. Essentially, the value of the investments is not enough to meet the funeral plan obligations of the company.

FRP said customers’ payments to Safe Hands “appear to have been used by the company to acquire investments, subject to deductions for the costs of administering the funeral plans. Investments are understood by the administrators to comprise a combination of equities, bonds, cash, real estate and loans.”

FRP said it needs to investigate the legal structure of these investments before they can be realised in order to get plan holders’ their money back. At the moment there’s no guarantee customers can get their money back and no refunds are currently being issued.

However, if you paid for your funeral with a credit card you may be entitled to make a claim under section 75 of the Consumer Credit Act 1974.

Toby Doyle, CEO of funeral price comparison service Memorialise, said the demise of Safe Hands was inevitable when the FCA called time on funeral plan sellers paying hefty commissions on leads for funeral plans and banning outbound cold calling.

Doyle said: “Until the FCA announced regulation, any shortfalls within the trust would have apparently been covered by more funds being ‘invested’ with Safe Hands by new plan holders.

“This practice should have been stopped long ago. Funeral plan sales have often not been driven by the need to provide customer value and a worthwhile valuable product but by offering high cost ineffective plans which often do not do what they are supposed to do, and the primary purpose of which is to pay excessive commissions to middlemen.”

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