Category Archives: funeral plan regulation

funeral plan regulation

Independent Advice Needed on Funeral Plans

and that is where we come in! No pressure, just Independent Advice. Here is an article from Golden Leaves:

Most Middle Aged Consumers prefer to purchase Funeral Planning products away from the Funeral Home!

New research by Funeral Planning firm, Golden Leaves, has revealed that the majority [62%] of middle-aged consumers, aged 50 – 65, and over 46% of consumers over 66 years of age believe funeral plans should be purchased alongside other ‘later-life planning’ products, such as a Will, rather than purchased via a Funeral Home.

The survey, which questioned 1,050 consumers between the ages of 50 and 85 on their perceptions of the funeral planning sector, also revealed that over a third [35%] of consumers aged 50 – 65 felt anxious or distressed with the idea of having to visit a funeral parlour in order to purchase a funeral plan.

This behaviour was confirmed by the fact 65% of respondents within this age bracket who had purchased a plan, had done so via a Funeral Planning firm, Will writer, Financial Advisor or Legal Services company.

Conversely, in analysing the responses from consumers aged 66 – 85, both consumer behaviour towards purchasing the product, and perception towards funeral parlours, does change with age.

Results show that over half [54%] of consumers between the ages of 66 – 85 didn’t believe that funeral plans needed to be associated with ‘later life’ planning products, where a massive 84%advised they didn’t feel anxious or concerned with having to purchase a funeral plan directly from a funeral business.

The research, therefore, demonstrates that although middle-aged consumers understand the important role of a funeral plan, they would feel more comfortable in purchasing it as part of the ‘later-life’ planning process via a dedicated firm or financial advisor; where the vast majority of more elderly consumers expressed no concern at having to enter a funeral parlour, confirmed by the fact 55% of 66 – 85 year old’s advised they had or would purchase a funeral plan from a Funeral Director.

On discussing the research, Barry Floyd, Managing Director of Golden Leaves, said:

“This latest research is extremely telling and very much aligns with Golden Leaves’ experience of consumer behaviour associated with the purchase of funeral plans spanning the last decade at least.”

“For many people, entering a Funeral Parlour can seem a finite and scary experience, yet they understand the importance of having a Funeral Plan in place to avoid burdening their loved ones with associated costs. Ultimately, for consumers in the 50 – 65 age demographic, aligning funeral plans with other ‘later-life’ planning products, such as will writing, is a natural association that focuses on the importance of maintaining control, whilst removing it from a morbid funeral parlour environment.”

Other key take outs from the survey include:

  • Despite the age bracket of consumers surveyed, just 65% confirmed they had written a will, with just 24% advising they had purchased Life Insurance.
  • 46% of respondents believe that the average funeral costs between £2,000 – £4,000, with 44% of respondents believing the average funeral to cost between £4,000 – £6,00
  • 51% of respondents thought the average Funeral Plan costs between £10 – £25 per month, with 37% believing plans to cost between £25 – £50 per month.

Barry continued:

“Considering the current political appetite to potentially reform the regulation around the funeral planning product, it is important that HM Treasury and policy makers understand that careful consideration needs to be applied when constructing any new regulatory framework.”

“The majority of middle-aged consumers and even 46% of consumers aged 66 – 85 would rather associate funeral plans with later-life planning, as opposed to the somewhat scary environment of a funeral parlour, which means funeral plan providers and other estate planning, will-writing,   financial or legal representatives need to be able to offer these products to fulfil the clear and considerable consumer demand.”

“The growth witnessed by the sector over the last decade, has been largely delivered by consumers buying from funeral planning companies and their reselling agent networks amongst other non-funeral-based distributers. This has actually led to increased market competition, effectively driving costs down whilst keeping operational standards high in order to attract and benefit consumers.”

As one of the first to introduce the funeral plan product to the UK market, Golden Leaves are widely recognised as being one of the UK’s oldest and most reputable Funeral Planning companies.

Chairman of Golden Leaves, Steve Rowland added: “Golden Leaves are supportive of increased regulation but we firmly believe that it should not reduce consumer choice, increase costs for the consumer, or distort the market in such a way that delivers poor consumer outcomes.”

Safe Hands Funeral Plans and the FPA

The Funeral Planning Authority

Though there is no statutory regulation/governance of the funeral plan industry at the present time (meaning there is no official set of standards that funeral plan companies must, by law, conform to), here at Safe Hands Funeral Plans – as a company committed to ensuring customers’ best interests are served at all times – we fully advocate and support the idea of there being statutory regulation of the industry and we feel that the FPA, with its industry knowledge, experience and expertise should be given statutory regulatory status by the government (which would mean that all funeral plan providers, by law, would have to be registered with the FPA).

In May 2018, Safe Hands Funeral Plans submitted its formal application for registration with the Funeral Planning Authority. For any provider, the application, assessment and approval process can and does take several months to conclude – and here at SHFP we are as confident as we can possibly be that our all aspects of our operation will be found, by the FPA, to meet with their qualifying criteria, and that we will be successful in becoming registered with them well before the end of the 2018. In the mean time, customers should take great comfort from the fact that legislation exists, under the Regulated Activities Order (Financial Services and Markets Act 2000), that all funeral plan companies must, by law, abide by to ensure their customers’ monies are invested in trust funds that are independent (meaning the customers, not the company, are the beneficiaries of the trust fund), that the investment of the trust fund is independently managed, that the assets of the trust are independently analysed every 3 years to assess whether they are sufficient to cover the company’s liabilities (customers’ funerals, in other words), and that the company itself is independently audited. In all respects, Safe Hands Funeral Plans complies with this legislation.

Further details about the FPA and their registration process can be found at www.funeralplanningauthority.co.uk.

Funeral Plan Research – How Big Is The Teacup

Below is an article produced by Dignity Funeral Plans commenting on a report they paid for from Fairer Finance.

Our comments: the report itself is actually not too bad, but Dignity has overhyped it to follow their own agenda.   One interesting fact it unearthed is that Dignity Funeral Plans no longer cover doctors fees for cremation.

It also fails to point out that Dignities many crematoria charge around 50% more than the average, thus disadvantaging other providers some of whose third-party allowances are not enough even to pay the fee at a Dignity crematorium! To be fair, they do offer much longer time slots than many other crematoria, so higher costs are inevitable.

FCA regulation, with its predecessors, managed to reduce the availability of person to person financial advice by more than 90%, and decimated the number of genuine independent financial advisers.   Whilst we agree there are cowboys selling the plans, and some of the literature could be a great deal clearer, on past record, FCA regulation would be a disaster for all but Dignity and the Coop who either have direct sales forces or tied agents, mostly very big – Dignity cancelled our agency because we couldn’t promise to sell 1,000 of their plans every year!  Independent Advice, such as ours, would be priced out of the market by heavy-handed regulation.

On to the PR, there is a link to the actual report at the bottom.

Funeral Plans Research: Lack of regulation leaves millions of consumers at risk

Unregulated funeral plan market leaves millions of pounds of consumer money at risk

  • Report says perfect storm is brewing of misleading sales practices, lack of consumer understanding and lack of regulation in funeral sector
  • Up to 6 million people over the age of 50 have been contacted; around a third of those contacted felt they were pushed to take out a plan
  • Lack of transparency and compensation scheme means millions of pounds of consumer money could be at risk
  • Report calls for statutory regulation of the funeral plan sector

Independent consumer group, Fairer Finance, in partnership with Dignity Funerals, has published a report calling for stronger regulation of the funeral planning industry. The report, “Is the prepaid funeral planning market working well for consumers?” suggests there is significant evidence of mis-selling within the industry and that millions of pounds worth of consumers’ money could be at risk. Although the report was commissioned by Dignity, Fairer Finance retained full editorial control.

Funeral plans are an effective way for consumers to plan and pay for a funeral. Between 2006 and 2016 there has been a near fivefold increase in the number sold each year.  As a result 1.2 million UK consumers now own a plan. It is believed that a significant proportion of this growth is due to websites purporting to be comparison sites combined with high pressure telesales tactics.

Funeral plans look and feel like a financial services product, but 75% of consumers wrongly believe their plan is regulated by the Financial Conduct Authority.

The report shows that:

  • There is evidence of persistent and high pressure sales practices often through aggressive third party sales intermediaries. A telephone survey of 1,001 adults over the age of 50 indicates that as many as 6 million people have been marketed to by funeral plan providers or their agents and nearly half (49%) of those contacted over the phone have been re-contacted 2 or more times, 46% agreed that they were being pushed to take out a plan when re-contacted and 63% felt this additional communication was not ‘useful’.
  • Lack of clarity – Consumers do not understand the differences between plan types, are confused by industry terms and are unaware of the potential for and scale of extra costs, and other product exclusions. Over 90% of those identified as contribution style funeral plan holders wrongly thought their plan guarantees to pay for cremation costs when this was not the case.
  • Mismatch of customer expectations – The research demonstrated that consumers tend not to understand what is and isn’t guaranteed by their plan. Customers buying these plans are often elderly and more vulnerable and not around to check whether the product met their expectations when a claim is made.
  • Safety of consumer money – There is very poor transparency around what happens to customer money. While all money must be placed in a trust, or a whole of life policy, few providers are explicit about funding levels and where the money is invested.  There is no safety net if a provider was to become insolvent.
  • Lack of consumer protection – The industry is subject to voluntary regulation by the Financial Planning Authority. Some providers are not part of this voluntary regulation scheme.  Third party sales firms are not even subject to voluntary regulation. Consumers do not have access to an Ombudsman service in the event their complaints are not resolved satisfactorily.

James Daley, Managing Director and Founder, Fairer Finance, said; “Funerals have become ever more expensive over the past decade, and pre-paid plans can be a great way of locking in today’s prices, whilst also ensuring your family isn’t left with this significant financial burden after you’re gone. Although there are some reputable providers working in the interests of consumers, the sector has rapidly expanded over the last few years, with our research revealing a worrying number of conduct issues and lack of consumer protection.

“The combination of a fast growing market fuelled by high pressure sales to a potentially vulnerable customer base is creating a perfect storm. A growing number of customers are likely to be let down when their plan is claimed on – with some funeral plan providers passing on significant extra costs to the families. And there is a concern that client money is not always being adequately looked after. Without intervention, we may yet see a Farepak-style collapse in this market, which leaves thousands of customers out of pocket.”

Simon Cox, Head of Insight and External Affairs, Dignity, commented;
“The sector is evolving into a two-tier market; those committed to offering quality products and services, versus those willing to “sell at all costs”, without strong governance or worry about fair customer outcomes.

“We believe a governance gap is responsible for an explosion of online and telesales organisations who have moved on from PPI and accident claims management into funeral plans. Our worry is that this situation is not sustainable, and before too long poor practice will result in one or two struggling to fulfil their obligations, leaving the rest of the sector to deal with the debris.”

Dignity and Fairer Finance are committed to working positively with consumers, government regulators and partners in the industry to explore these recommendations and encourage other plan providers to do the same. It is hoped that over the coming months, an improved consumer environment in the sector can become a reality.

Click here to download the full report

Golden Leaves The State of the Funeral Plan Market: Is Critiscism Well Founded?

(This is an interesting article – what it doesn’t emphasise is how important it is to get Independent advice on funeral plans – and we don’t think there is anyone who can match us in that respect!)

The State of The Funeral Plan Market.

Some openly aired criticism of the funeral planning industry is fair, appropriate and deserved. In fact harsh criticism in any industry is healthy, as it allows a sector to develop regulation to further improve its standards. Conversely, though, some of the over-exuberant and rather unattractive ‘bandwagon’ jumping, that the industry has witnessed particularly from some quarters of late – really hasn’t been helpful at all.

Golden Leaves Managing Director, Barry Floyd criticized media reporting of late, claiming that some journalists should be ashamed of themselves for publishing articles, some of which were so poor, that they were bordering on  “Sensationalist and scaremongering”

“It is a very sad day indeed when we see the general public being confused by a combination of poor, sensationalist and inaccurate reporting, shambolic radio shows and widespread confusion in terms of media content, as to the differences between the pre-need product and the poor value funeral insurance product. Does that mean that Golden Leaves or indeed most of the industry as a whole, is guilty of poor quality standards whilst delivering an unstable, unsustainable or poor value for money product to its clients – frankly, of course it doesn’t.

Our industry was founded by companies with pedigree, ethics and consumer protection at their very core and many of those companies still exist today and are just as reputable as they were decades ago. Golden Leaves has been pivotal in the development of the funeral planning industry since its inception in the early 1980s (being founder members of both the NAPFP and the FPA) and with this historical positioning in mind, we firmly believe that we are in a particularly credible position to deliver, quality, standards, valued products accompanied by impeccable heritage and pedigree. Golden Leaves has always had an intensely customer focused view of what constitutes appropriate sales practices and behaviour.

We refuse to work with far more sales partners than we agree to and this is testament to our robust compliance and on-boarding programmes. This fundamental approach by the brand has been clearly underpinned by a constant leadership team at Golden Leaves over the last eight years, whilst nearly all other mainstream planning companies have had several major officer appointment changes during that same period and some have even had a number of ownership changes. All this at a stage in the sector’s evolution, when it has experienced significant growth, most of which has been achieved by generating interest and sales outside of the funeral home, a channel that nearly all plan providers operate in.”

Since 2009, Golden Leaves has experienced meteoric growth that has seen its sales outstrip the performance increase of the FPA registered market over the same period by almost 400 per cent. The company’s market share has also increased to the highest point in the company’s history.

“All this growth has occurred at a time when increased market participants, operating across more varied distribution channels have made competition in the sector fierce. We are proud to say that even during these times of accelerated growth, we have not lost sight of our core principles. Our customer satisfaction rate is 99.8 percent based on our level of complaints compared against our level of sales. This is not to say that we are perfect. No brand operates without the occasional hiccup and this is why we vehemently support the increasing of the rigidity of the regulatory framework and governance provided by the FPA. Although all planning companies operate differing models, we believe that there should be a base level of quality and standards for all companies to at least achieve.”

The Golden Leaves Trust fund is fast approaching £100,000,000 with a surplus running at over 20 per cent surplus over its liabilities. It’s board of Trustees have significant backgrounds in both the field of consumer protection, trading standards and the world of financial investments; underpinning this are their investment banks Julius Baer (the world’s most capitalised bank) who have also just won the EUROMONEY award as the ‘World’s best bank for Wealth Management’ and Quilter Cheviot, one of the largest UK Investment banks that have been at the forefront of the investment sector for over 240 years.

“All Golden Leaves funeral plan funds are either placed into an insurance that is FCA regulated or an FPA regulated Trust fund providing security of funds to all of our clients. This is a position certainly not enjoyed by some other planning companies. So standing out from the sector is Golden Leaves, a company with an impeccable history and heritage. We believe we deliver a market leading product, secure and competitively priced, that protects our clients at the time of need whilst delivering significant peace of mind for their next of kin. We place our clients (our Golden Leaves) at the heart of everything we do, which is one of the reasons that our brand, that took over thirty years to build, is so trusted.”

This article was first published in the Funeral Service Times.

Golden Charter Backs Funeral Plan Regulation

FUNERAL PLANNING AUTHORITY ‘NEEDS WIDER POWERS’ says Golden Charter.

• Golden Charter backs new Code of Practice.
• Welcomes industry report on pre-paid funeral plans.

Increased regulation of pre-paid funeral plans and wider powers for the Funeral
Planning Authority (FPA) would ensure continuing consumer protection and
support, the UK’s leading funeral plan provider Golden Charter believes.
It is backing moves at the FPA to strengthen the Code of Practice for providers
in the growing market, as well as a push requiring all companies operating in the
sector to be registered with the FPA. While the overwhelming majority of prepaid
funeral providers are members of the FPA, the industry self-regulatory body
which exists to protect consumers’ interests, membership is voluntary only. This
means that some providers and intermediaries are operating without an
independent body to hold them to account.

A recent report by consumer group Fairer Finance called for full Financial
Conduct Authority (FCA) regulation of pre-paid funeral plans.

Mark Moran, Golden Charter’s Director of Intermediaries, said: “We welcome this
report and the points it raises in relation to ensuring customers fully understand
what level of cover they are getting when they take out a funeral plan.
“As a founding member of the Funeral Planning Authority, consumer protection
has long been a priority for Golden Charter and we continue to strongly
recommend that customers seek out a plan from an FPA-registered provider.
“We only work with proven third parties and our policy is for all new
intermediaries to be professionally accredited. Our belief is that a stronger FPA
with mandatory membership for funeral plan providers and those marketing
funeral plans is the best way to ensure consumer interests are protected.”

The Fairer Finance report also highlighted the negative aspects of insurance backed
plans, where money paid in is lost if the plan holder stops making payments.
Mark continued: “Guaranteed whole of life plans have been the subject of
criticism for many years, but have remained a suitable vehicle for a proportion of
the population. We believe in offering a wide range of payment methods to
ensure customers can select the option that best suits their individual
circumstances. Our low cost instalment payment option is an alternative to
insurance-backed payments, offering similarly low premiums while ensuring any
money paid in is not lost if payments stop. These funds will be held in the Golden
Charter Trust until the time of need.”

The market leader, which is owned by an association of around 730 independent
funeral directors situated throughout the UK, also believes more needs to be
done to educate consumers on the nature of funeral plans, which can be
mistaken for financial investment products.

Mark said: “It’s a common misconception that a funeral plan is an investment
product, when in fact it is a contract which allows an individual to pay for a
funeral in advance. This distinction is important as it means that at the time of
need, with a Golden Charter funeral plan, the funeral director’s services included
in the plan are guaranteed to be covered – no matter what.”

All funds* received from the sale of funeral plans by Golden Charter Ltd are paid
into the Golden Charter Trust. The Trust is a fund whose assets are entirely
separate and independent of Golden Charter Limited. The most recent actuary’s
report at March 2017 showed that the Trust’s assets were valued in excess of
100% of the funds required to meet future invoice costs in respect of all the
funeral plans in the Trust, allowing for increases in funeral costs in line with
future levels of inflation as measured by the Consumer Price Index.

*If the fixed monthly payment option is selected, funds are paid into a UK based
life assurance company.