Funeral Plans 2022 – What You Need to Know Now

As we move into 2022 and observe the ongoing pandemic, it’s important to consider the value of later life planning. So, what are the new regulations regarding funeral planning?

The government is currently consulting on proposals to ensure that the Financial Services Compensation Scheme operates effectively if a regulated pre-paid funeral plan provider fails.

The regulator states that these changes will introduce high standards in the funeral plans market and will require firms to verify that plans are sold fairly, perform as expected and ensure value for money. Funeral plan providers must now familiarise themselves with the new regime or prepare to leave the market before 29 July 2022.

woman with lily flowers and coffin at funeral

Upcoming Changes to Funeral Planning

Currently, the Funeral Planning Authority (FPA) regulates the funeral plan industry. In July 2022, this responsibility will be handed over to the Financial Conduct Authority (FCA). It’s important for both firms and consumers to consider these changes before moving forward into future funeral plans.

In addition to their existing measures, FCA have designed rules to enhance consumer protection from 2022. One of these rules is the prevention of funeral instalment plan products which do not guarantee that a funeral will be delivered. This new measure will guarantee that funeral plans will always deliver a funeral, unless the customer dies within 2 years of taking out the plan, in which case a full refund will be offered.

Cold calling will also be banned, creating an opportunity for new methods of advertising and ensuring that funeral plans are sold fairly. The director of competition at FCA, Sheldon Mills, stated that, “funeral plans should provide customers with comfort and certainty that their affairs are in order” – reiterating the positive goal of these reforms.

Commission payments to intermediaries, such as funeral directors, will also be banned to ensure products represent fair value. The ban on commissions has attracted comment as FCA acknowledges the rules may cause some firms to withdraw from the market. However, they point out that other intermediaries such as financial planners and will writers will be able to provide introductions to funeral plans, if they charge fees directly to the customer.

Consumer Advice

Consumers who are considering purchasing a pre-paid funeral plan before July 2022 should research their options carefully to ensure that the plan provider is right for them.

Until 29 July 2022, customers won’t know if their plan provider will be authorised by FCA and cannot make a complaint to the Financial Ombudsman Service or make a claim to the FSCS. As a result, their money won’t be protected if their plan provider fails.

man comforting woman at funeral

To help new and existing funeral plan customers feel secure in their position, the FCA have published a list of all known funeral plan providers and the status of their application for authorisation.

The proposed rules aim to minimise harm to customers by ensuring that contracts can be transferred to new providers where possible if a regulated pre-paid funeral plan provider fails.

Applying for Authorisation

Applications for authorisation for funeral plan providers intending to remain in the market after 29 July 2022 opened on 1 September 2021.

If you’re a customer with concerns regarding your funeral plan product, contact the expert team at A M Davies regarding later life planning.