A third of pre-paid funeral providers are one step closer to being authorised, ahead of the 29 July 2022 date given for the Financial Conduct Authority (FCA) to regulate the industry.

The FCA said it has 24 firms (66 identified in the market) on its list of providers it intends to authorise, including the largest funeral plan providers. In total, these 24 firms hold approximately 87% of existing customer plans (see the list below).

It said it is still assessing a small number of providers’ applications, adding that this doesn’t necessarily mean there are concerns or that they will not be authorised when it starts to regulate the sector.

Emily Shepperd, executive director of authorisations at the FCA, said: “As this sector approaches regulation, we want to provide holders of pre-paid funeral plans with some reassurance, which is why we have published a list of the firms we intend to authorise.

“Our regulation will lead to higher standards in the market and boost consumer protection. We want to see an improvement in the way customers are treated, with better value products, better sales practices and better controls in place so consumers can be confident they will receive the funeral they expect.”

Pre-paid funeral market regulation

Until regulation comes into force (29 July), customers don’t have access to the Financial Services Compensation Scheme (FSCS).

However, from that date, funeral plan providers will need to follow the FCA rules, which include:

• A ban on cold calling and new standards on advertising to ensure plans are sold ‘fairly’
• A ban on commission paid to intermediaries, such as funeral directors, to ensure products represent ‘fair value’
• Full checks on the fitness to operate of those selling funeral plans
• A guarantee that funeral plans will always deliver a funeral unless the customer dies within two years of taking out the plan, in which case a full refund will be offered
• A guarantee that customers will receive a full refund if they cancel a plan within 30 days of purchase, or pay only a ‘reasonable’ charge later on.

Complaints will also be taken on by the Financial Ombudsman Service and they will be covered by the FSCS if the provider goes bust.

Which funeral providers is the FCA intending to authorise?

• Alternative Planning Company Limited
• Avalon (Europe) Limited
• Avalon Trustee Company Limited
• Celebration Of Life Planning Ltd
• Central England Co-Operative Limited
• Co-Op Funeral Plans Limited
• Crystal Cremations Ltd
• Dignity Funerals Limited
• Distinct Funeral Plans Limited
• Ecclesiastical Planning Services Limited
• F A Albin & Sons Limited
• Family Funerals Trust Limited
• Freeman Brothers (this includes Peter Christopher Freeman and Bridgid Mary Freeman)
• Golden Charter Limited
• Golden Leaves Limited
• Haven Personal Funeral Plans Ltd
• Independent Funeral Planning Services Ltd
• Low Cost Funeral Limited T/A Affordable Funerals (this includes Memoria Limited)
• Peace Burials Limited
• Plan With Grace Limited
• Pure Cremation Planning Ltd
• Southern Co-Operative Funerals Limited
• The Independent Family Funeral Directors Ltd (this includes Fosters Family Funeral Directors)
• William Alty & Sons Limited.

Charles Rogers, chief executive of Plan with Grace, said: “We’ve argued for many years that the funeral plan industry is long overdue for regulation and this is great news for all our customers and partners.

“We believe that FCA regulation will provide the peace of mind that our customers need when purchasing a funeral plan.”

What if my funeral provider isn’t authorised?

From 29 July 2022, any funeral plan provider that isn’t authorised by the FCA will be committing a criminal offence if it attempts to sell or administer a funeral plan contract.

The FCA said it “continues to work with industry to find longer-term solutions for customers of providers which have not applied for authorisation or have withdrawn”.

As part of its list of funeral plan providers and the status of authorisation, the FCA said that if you have a plan and your provider hasn’t applied for authorisation yet, or isn’t going to apply for authorisation, they should contact you to tell you what’s happening with your plan. If you haven’t heard from your provider, contact them.

For those thinking of buying a new plan before FCA regulation begins, it warns people not to buy a plan from a provider if its status is, ‘not applying for authorisation’, ‘no application submitted yet’, ‘application refused’ or ‘application withdrawn’.

The FCA added that where a firm’s status is ‘not intending to apply – planning to transfer’ or ‘not intending to apply – completed transfer’, customers are encouraged to contact the firm and carefully check how you may be affected, before you take out a new plan.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Three firms have been highlighted as particularly concerning, including Safe Hands, which has been plunged into administration, and Empathy and Unique, which the FCA has urged people not to take out a plan with. Some of the others may be authorised later, or transfer customers to other authorised providers without any material changes to the service.

“However, not every plan is safe, and with so little certainty about the future of many firms, it’s bound to be causing real stress for people who only ever bought a plan to try to avoid worrying about their own funeral.

“If you’re considering buying a plan, it may well be worth waiting until the FCA is authorising the sector, and picking an authorised firm. That way you can be certain of its status, and the protection it gives you. If you already have a plan with any of the firms the FCA hasn’t confirmed it is intending to authorise, get in touch to ask what’s going on. Check whether they intend to apply for authorisation, and ask whether they can still deliver on your plan. It’s also worth asking what your options are – in writing – and checking when you can expect to hear from them.”