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pre paid funeral at sea

Sensible Approach to Funeral Plan Regulation

Response to call for evidence on Regulation of Pre Paid Funeral Plans

From Derek Forbes trading as Forbes Management

Contents.

  1. Overall opinion and views by Forbes Management
  2. Appendix – answers to consultation questions 1-18
  3. Background and involvement with statutory and voluntary regulation of legal and financial products and services stretches back over several decades.

The views expressed in this response are the views of Derek Forbes (trading as Forbes Management) alone and do not represent the views of, although may well coincide with, any other individual, firm or organisation. No other individual, firm or organisation has been consulted prior to the submission of this response.

The PPFP sector is in need of regulation, but great care must be taken not to repeat the disruption caused by the FSA (as was) in the late 1980’s when a regulatory regime was created that wiped out the direct selling sector of the life insurance industry by imposing unacceptable administrative burdens on the customer facing sales process. Lengthy fact finds, “reasons why” letters and commission disclosure made the sales process too burdensome for simple domestic sales and almost all life companies disbanded their sales forces. Estimates are that some 40-50,000 hard-working and honest men and women lost their jobs. All to counter the dishonest activities of a few high profile intermediaries who were too clever to be caught anyway and simply went on to engage in other market sectors where they could operate with impunity.

The result is that, today, in the domestic market, hardly anyone buys life insurance, savings plans or individual personal pensions. The government has recently cut bereavement payments to widows with young children. A simple term insurance sold to a young husband would have cost very little for a substantial sum assured. Sadly there is no one left to sell such policies. The saying applies: “Insurance is sold, not bought”.

Retirees who are not in an occupational pension scheme have very little put away for old age and most C1 and lower category individuals rely largely on the OAP for retirement income. This situation and trends will only worsen as the population ages. Financial advisers concentrate almost exclusively on high net worth individuals and corporates. The average age of IFA’s is estimated at around 50+ as very few young people see financial advice (previously known as insurance sales) as a career path.

Had the regulation been directed at the product providers (the life offices), who were obsessed with premium income and manpower at the expense of virtually everything else, this current scenario could have been avoided.  Sadly the life offices did not want to erect any barriers to maximum business and turned a blind eye to malpractice and courted big and sometimes disreputable business producers with “golden hellos”. They refused to monitor the activities of their own salespeople – let alone the independents and tied agencies. Initially “compliance officers” were appointed by the life offices, but were largely ineffective due to the continuous courtship of high producing sales people. In a number of cases the compliance officers were too scared to report on the misdemeanours of the high producers and were told to “lay off”. So the many (both the sales people and the public at large) suffered because of the misdemeanours of the few and the lack of concern by the providers.

Similar situations must not be allowed to arise in the PPFP market, as this kind of over-regulation would similarly kill off the market.

Future regulation of PPFP’s, therefore, should concentrate on the plan providers and not on the client facing sales process. It must be remembered that PPFP sales are hardly ever the main business activity of those who sell them. They are secondary to funeral directors – obviously – as their main function is carrying out funerals. Other advisers, largely will writers and IFA’s, do not see PPFP’s as their main function and are nearly always an ancillary service to existing clients. Excessive administrative burdens such as individual registration, authorisation, extensive paperwork and commission disclosure will simply remove the incentive to sell the products.

Whilst generous commissions may be seen as an incentive to carry on under strict statutory regulation, the plan providers would be disincentivised by excessive compliance burdens such as the supervision of direct (statutory) regulation of customer-facing individual salespeople and firms.

Previous Treasury initiatives to regulate the PPFP sector were more effective. In 1999 consultation took place leading to the inclusion of PPFP’s in the Financial Services and Markets Act 2000. This established the two main vehicles for funding PPFP’s – (Regulated Activities Order 2001) I.E. Trust based plans and Life Insurance based plans.

Incidentally I was involved, representing the Society of Will Writers, with the Treasury consultation to regulate will writing in the early 2000’s– this was not pursued. It was a blatant attempt at protectionism by the Law Society. It is interesting to speculate as to from whence comes the impetus for the current PPFP consultation. A diverse market in terms of provision should be encouraged and not be allowed to rest in the control of a few very large providers.

Future regulation should be created to concentrate upon customer protection from the product providers. The providers should be responsible for the activities of those who sell their plans, rather than direct statutory regulation of individuals and firms.

Protection for the customer should be provided in the two main categories of PPFP’s as follows:

Trust based plans.

  1. There should be maximum transparency surrounding the trust and its workings.
  2. An annual trust report should be issued and available to all customers.
  3. The annual report should include a breakdown of trust investments and a description of investment strategy.
  4. A comment on the basis of actuarial valuation of assets to liabilities. For example whilst Government Securities may represent a very safe investment, fluctuating interest rates can have an effect on capital values.
  5. Disclosure of amounts drawn from the trust for marketing initiatives and other activities.
  6. Declaration of any trust fund surpluses and details of how the surplus is distributed – ratio of retention in the trust and distribution to directors and others.
  7. Full disclosure of how the trust attempts to combat inflation. (Recently one major provider uplifted its payments to funeral directors by 1% to cover two years annual inflation).
  8. Breakdown of guaranteed elements of the plan and disbursements, together with administrative costs within each plan.

Life insurance based plans.

  1. Disclosure of the amount of client money allocated to the insurance policy.
  2. Disclosure of any financial relationship between the provider and the life company.
  3. How the life policy combats inflation.

Other safeguards.

Providers should ensure that intermediaries adhere to a recognised code of conduct. No cold calling, no misleading, no pressure selling etc. The Funeral Planning Authority (FPA) will doubtless create a workable model for this.

Thought to be given as to the differences between providers who are funeral directors and providers who are not.

The former can easily instruct their own employed staff to carry out the funerals, and can even conduct funerals arising from funeral plans below cost as “loss leaders” in order to increase market share, but they have no such control over funeral directors who they may appoint in areas where they do not have one of their own FD’s.

For providers who are not FD’s, thought should be given as to the details of the contracts between the provider and the FD and any other financial interest that may exist between the two. Should incentives to sell certain products by differential commission rates depending upon the product sold or enhanced commission or other incentives be offered depending upon the volume of sales submitted by the intermediary? The role of the FPA in all the above will be crucial. Will the FPA have statutory powers to discipline providers who fall short of the codes of behaviour set out by the FPA?

A transparent complaints procedure should be in place. Should all providers be bound to report all complaints to the FPA or should the FPA make regular check on such issues? The role of the CQC in the monitoring of GP practices whilst very much more complex and multi-layered than potential regulation of PPFP’s is a good model for a regulatory regime.

Other issues

The FPA could be required to insist that providers monitor the fitness of secondary agents – individuals or firms. This could be achieved by ensuring that such sales outlets adhere to a strict code of conduct. This could be addressed by ensuring that such parties belong to recognise statutory body I.E. Solicitors Regulatory Authority (SRA) or direct authorisation by the FCA (IFA’s), CII and others such as ILEX, ICA etc.

Voluntary regulators should be included provided that they monitor their members to ensure the members adhere to an acceptable code of conduct to include carrying PI insurance and commit to Continuous Professional Development (CPD). Such bodies would include The Society of Will Writers (SWW) the Institute of Professional Will Writers (IPW) and others.

Consideration should be given to empower the FPA to monitor the terms and conditions issued by providers. Particularly the readability and ease of understanding. Many contracts for PPFP and other goods and services in the marketplace generally have T&C’s that are hard to read and are largely very legalistic, designed to provide a “get out” in cases of dispute. Bearing in mind that many PPFP customers are elderly, maybe with poor eyesight, to make a contract dependent upon the customer having “read and understood” the T&C’s, as many providers do, is unfair. In other market sectors this problem is even worse – consumer credit agreements, car leases etc. are all virtually impossible to understand without legal expertise. In addition, most people just tick “accept” when signing up for services on line. The recent Plain English Campaign www.plainenglish.co.uk should be adopted by those regulating the PPFP sector.

Finally, some products are marketed as “Funeral Plans” but are actually term insurance policies on the life of the customer. In other words just a way of providing a sum of money upon death. Some of these policies are issued with very restrictive conditions, such as cancellation of the policy if one monthly premium is missed.

Is it the intention or within the remit of the consultation to address the way these policies are marketed and a more specific description of their nature be insisted upon?

  1. Appendix

Answers to consultation questions 1-18

Question 1: Are there any other common ways to structure funeral plans, not outlined in this call for evidence?

Answer 1.Not to my knowledge – but some older FD firms still take customer money and “keep it” to fund future funerals without using the approved trust or life assurance channels. The FPA will investigate any such instances that are brought to their attention.

Question 2: Are funeral plan providers always the policyholder of underlying insurance policies? Are you aware of any examples of insurance intermediation within the funeral plan sector?

Answer 2. As far as I know the provider holds the policy on the life of the client as “life of another”. Some IFA’s sell plans.  Also as mentioned above: The relationship between provider and life company should be transparent.

Question 3: Where providers engage with third parties (e.g. funeral directors, charities, external companies), in what capacity do these third parties act and what is their relationship to the funeral plan provider? How are market participants remunerated and do any conflicts of interest arise?

Answer 3. As agents (retailers) of the plan providers’ products. Some FD’s are owned by the provider. Remuneration is usually by commission on plans sold. The FPA limits the percentage of the plan price that can be used to fund all acquisition costs. Non FPA members do not need to follow these guidelines

Question 4: Are there any additional issues you think the government should be aware of in relation to the way in which funeral plan products are structured or sold?

Answer 4. My views are outlined in the main text of my submission

Question 5: How, and through what channels, do funeral plan providers communicate with consumers for the purposes of distributing information, promoting and selling funeral plans?

Answer 5. Differs provider to provider – some communicate fully, some are opaque. Should the ASA be tasked to ensure “honest –truthful etc”. Some advertising copy is clearly designed to avoid important detailed features of the product. E.G. Not a clear explanation of the difference between guaranteed services and disbursements.

Question 6: What are your views on the scale and nature of consumer detriment at the point of sale? Please provide evidence where possible.

Answer 6. Hard to determine. Recent TV documentary exposed overselling. Also see comments in my submission above regarding Terms & Conditions. It should be borne in mind at all times that many PPFP customers are possibly elderly and vulnerable.

Question 7: To what extent is cold calling present within the funeral plan sector and does this present an additional or specific risk to consumers?

Answer 7. There are still outbound call centres. GDPR may improve this, but many are based on ”life style surveys” and client has no recollection of requesting information – probably just filled in survey to enter a competition.

Question 8: How much on average do consumers pay for funeral plans and in what circumstances would consumers pay money directly to funeral providers?

Answer 8. Varies considerably – hopefully based on national averages of “at need” costs. Most plans require money paid direct to provider or associated account. Most providers offer both monthly and single payment options. Monthly plans not to be confused with monthly life assurance term assurance plans advertised as “funeral policies or plans”.

Question: 9: What protections are currently in place for consumers (for example, complaints procedures) and how effective are these protections? How can complaints and claims be brought against funeral plan providers after the death of the customer?

Answer 9. FPA is in a better position to answer – depends on FPA membership and specific procedures. Providers should have complaints procedures. Some providers choose not to be subject to FPA membership and regulation

Question: 10: What protections are currently in place for consumers if a funeral plan provider were to have insufficient money to pay claims, and what is your view of their effectiveness?

Answer 10. Membership of FPA has a degree of protection – maybe should be greater – small issues could be absorbed. Large failures would be problematic.

Question 11: What is your experience of the scale and nature of consumer detriment (if any) that arises once a funeral plan has been entered into? Does this vary for different types of plans?

Answer 11. It does differ – is a funeral director appointed at outset and jointly guarantees with the provider to carry out his services at no extra cost however far into the future the funeral is required?, or does the provider have to search for a provider at time of need? This is particularly important if there is a shortfall in assets to liabilities. Probably does not arise for insurance based plans – only trust based plans – especially if the trust is not fully transparent. The client must not be misled into thinking that a specific funeral director has agreed to the plan when only a preference has been recorded.

Question 12: What are your views on the proposal to bring the sector within the scope of the FOS and/or the FSCS? What are most common types of complaints against funeral providers?

Answer 12. Presumably these remedies are only available to FCA regulated entities, so not advisable for reasons given elsewhere in this response. Unclear about level and types of complaints – providers do not generally publish these, but FPA should have powers to demand records of all complaints. (Rather like CQC does with GP practices).

Question 13: What types of investment strategies are being adopted by trustees who are managing trusts on behalf of funeral plan providers and what is your view on the effectiveness of these strategies in securing the short and long-term interests of plan-holders? Are trust returns withdrawn by providers for revenue raising/profit purposes and, if so, what proportion of these returns are withdrawn in this way?

Answer 13. This is fundamental to the issue of trust fund transparency. Some kind or overall monitoring should be in place – possibly by the FPA. Full reporting of acquisition margins are desirable. Are trust surpluses distributed to directors of the provider company and/or others? How is it decided what should be retained in the trust if a surplus arises?

Question 14: What are your views on the government’s proposal for FCA regulation of all funeral plan contracts and whether such a proposal will meet the government’s stated objectives (as set out above)? Do you consider that an alternative proposal could better meet these objectives?

Answer 14.  FCA regulation would probably impose excessive regulation on sales intermediaries – most would decide not to be involved, thus leading to collapse of the sector. My views set out more fully in my responses above – strengthening role of FPA in particular.

Question 15: How should the regulatory framework apply in relation to funeral plans that consumers have already entered into?

Answer 15. Probably impossible to create an effective structure. Only at need would any problem become apparent. Problems pre-need would be covered by complaints procedures.

Question 16: Should regulation extend beyond funeral plan providers, and apply to intermediaries engaged within the sector? Should such intermediaries become regulated entities, or should they be overseen by funeral plan providers as appointed representatives?

Answer 16. The latter – detailed reasons in my submission above. THIS IS PROBABLY THE MOST IMPORTANT MATTER UNDER CONSIDERATION.

Question 17: What would be the overall impact on the market/your firm if all funeral plan contracts were subject to FCA regulation? Are there specific activities or businesses, such as SMEs, within the sector that would be particularly affected by strengthened regulation? What is your view of the potential costs and benefits of the government’s proposal?

Answer 17. As stated this would be a disaster – my reasons in my submission above.

Question 18: How long would the sector need to adapt to any new regulatory framework the government may seek to put in place?

Answer 18. Quite quickly – a few months for retraining and reprinting and distribution of amended literature. Firms who are not currently members of and regulated by the FPA would take longer as FPA would have to conduct fitness procedures etc.

DEREK FORBES July 2018.

Educated at The City of London School, Derek spent his early years training as a lawyer at The Law Society School of Law and then developed a career in financial services. He studied CII examinations at the Holborn College of Law, Language and Commerce. He was Abbey Life’s advertising and marketing manager in its early days and then became a top sales producer, qualifying for the international Million Dollar Round Table.

Moving into management he became the top branch manager with Crown Life and then National Sales Manager for the direct sales forces of both Sun Alliance and Sun Life.

During this time he was a founder member of the Life Insurance Association and became a main board director of the LIA. When the LIA merged to become the Personal Finance Society, Derek was invited to become an Honorary Life Member of the Personal Finance Authority. After the introduction of statutory regulation, the direct sales sector of the life insurance industry virtually disappeared, so Derek pursued a career as a legal and financial marketing consultant. He became a Law Society approved training provider and senior management trainer at the Institute of Sales and Marketing Management, where he was awarded the Companionship of the Institute.

Seeing the potential of will writing he joined, and was invited to become the Honorary Chancellor of The Society of Will Writers and a member of their Executive Council, arranging and chairing their first ten annual conferences.

For twenty years he has been a business partner of Funeral Planning Services Ltd, designing and distributing funeral plans specifically for the legal and financial professions.

When Funeral Planning Services was taken over by The Ecclesiastical Insurance Company in January 2017, Forbes Management decided to use Funeral Partners Limited as the provider of the Legal & Financial Funeral Plans.

Derek’s knowledge of sales, marketing and management and the effects of regulation is extensive and his funeral planning design and distribution business model is based upon an extensive understanding of the problems and opportunities in the Will Writing and the legal and financial services marketplace.

He has written countless articles and books and has lectured extensively both in the UK and overseas. Mentioned in Debrett’s People of Today, Derek is a Liveryman and a Freeman of the City of London. He has served as a trustee of a number of local charities and has been chairman of his local council.

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

Direct cremation funerals to increase

Direct cremation funerals to  increase to 10% of UK funerals by 2030

Research[1] conducted by Dignity plc, one of the UK’s (self styled) premium funeral directors, shows that 53% of online consumers would consider a David Bowie style funeral for themselves, namely a Direct Cremation.

At the Prepaid Funeral Review, we have looked across the market at prepaid Direct Cremations with a little concern.  What happens if family and friends don’t agree with your decision to cut them out of the traditional funeral?  We always ask people to consider this and discuss it with family members and friend.  A good proportion of them then come back and opt for a more conventional funeral.   But let’s not spoil Dignitys’ Press Release:

A direct cremation is a low cost alternative to a traditional funeral, because cremations take place without a funeral service. The family arranges for the deceased to be collected, taken into care, and a cremation takes place without the family present.  Ashes can then returned to the family who often arrange their own reception or event to remember the deceased, which can be done at a significantly lower cost.

Annual unattended direct cremation volumes in the UK are estimated to be between 3-5% of UK deaths (18,000-30,000 people a year2) and Dignity is predicting this figure to reach or exceed 10% by 2030.

Simon Cox, Head of Insight and External Affairs at Dignity said; “The growth in the UK’s interest in direct cremation is in response to a shift in consumer attitudes towards funerals. Consumers are moving away from a one size fits all traditional funeral service and among the very many different needs this includes those who may wish to choose an unattended or low cost funeral option.

In addition public figures, such as David Bowie, demonstrated earlier this year that there are other options for people who choose a send-off with no fuss.  We witnessed a sharp spike in public interest for direct cremation immediately after Bowie’s death”.

John Troyer from The Centre for Death and Society at University of Bath said “Based on my research on the history of final disposal methods in the United States, direct cremation is something that many individuals choose when making end-of-life decisions about what should be done with their body. As in the US, I would expect to see interest in direct cremation continue to grow.”

Simon Cox continued; “To put it into context a basic funeral is £3,973[2] and is predicted to grow to £5,334 by 2021[3]. Not everyone wants to or can spend over £3,900 on a funeral with more and more people looking for alternatives such as direct cremation services, which can cost less than half the price. This is because a direct cremation requires so much less than the traditional funeral in terms of the various elements, people and planning.

 

[1] Research conducted for Dignity by Trajectory Partnership. Amongst an online nationally representative sample of over 2,000 UK individuals.  2 Calculation using ONS figures

[2] Matter Communications 2016

[3] Dignity based on data from Matter Communications 2011-2016

Buy The Right Funeral Plan

How to Buy the Right Funeral Plan.

Funeral Plans are all the same aren’t they?  NO, absolutely not!

Our Research Team spends hour and hours going over how prepaid funeral plans are set up.   Indeed, we very often know more about them than the sales teams who are selling them.  We also regularly point out to the funeral plan companies mistakes in their marketing material which could lead people to think they are getting benefits which they will not.  In the last week, that has happened on three occasions, which is pretty shocking.

When someone is trying to sell you a specific plan you have to assume that they are not going to tell you that plan has major disadvantages. With our research capability, we usually find the flaws pretty quickly.  Some of them are so bad that in our opinion, the plans should not be on the market.

Here are some ways you can avoid buying the wrong funeral plan.

  1. Don’t even consider a non-profit whole of life plan such as the Sun Life plan touted by  Michael Parkinson.  Read about the disadvantages here.  Unless you have talked to us and there is no way you can afford even the most basic of funeral plans.  Then they do have a place if – and only if – your finances are stable.
  2. Buy from a pushy funeral plan salesman, perhaps over the phone.  You can’t possibly grasp the full details without sitting down quietly reading the brochure and Terms and Conditions.  With us, we have a brief chat (typically minutes) then send you a written recommendation with the prices of alternative plans.
  3. Funeral Plans which pay the undertaker but not the third party expenses which are typically between half and a third of the final cost.  That could be a nasty shock when your family believe you have a proper funeral plan.   They do have their place, perhaps topping up one of the Over 50s insurances.  They are also much better than nothing, but the family need to understand their limitations.
  4. Not comparing the brochure with the terms and conditions, which hardly anyone reads.  The two documents surprisingly often do not agree with each other!
  5. Direct Cremation plans are relatively inexpensive – but they will upset those left behind if they are not aware of how they work.  Very few people will really be happy to advise friends and family, which is essential.   They are great, in the right circumstances, and thought through.
  6. Burial Plans do NOT include the cost of the burial plot/grave.  They can cost upwards of £1,000 or even £2,000.  That is if there are any available in your area when you expire.
  7. Avoid comparison sites unless you are certain they are independent.  Even the recent Fairer Finance Report list several “independent” review sites which were not independent (we are INDEPENDENT, and fiercely so – our mission is to find the right funeral plan for our clients.) No cost to you,

These are just some of the reason for having a chat with us and getting some independent advice on choosing the right funeral plan.  Out of hours, please do use the enquiry form, or you can leave a message on our free phone number 0800 0588 240 if you prefer. We will not pressure you, we’ll leave you to make up your own mind.  All we ask is that you use the form we supply if you decide to take our advice. And did we mention the bonuses we offer?

Fairer Finance Reports on the Funeral Plan Market: Comments

Fairer Finance Reports on the Funeral Plan Market.

It would appear that those compiling the report were new to the industry, and missed a few tricks, not least of which was the 500,000 unregulated non-profit whole of life policies sold each year, more than double the quantity of funeral plans. Well, that is our view, anyway PPFR Team.

Aside from that, the Report seems to feel that only totally comprehensive and totally guaranteed plans should be sold.  Not everyone wants to pay for limousines, wakes, flowers, memorials and the like. Indeed, no provider offers guarantees on all that.  For those who want, and can afford guarantees, they are available to some extent at least.  The majority of people just want an affordable way of covering the basics.   Well, that is our view, anyway PPFR Team.

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

New Fairer Finance report says perfect storm is brewing of misleading sales practices, lack of consumer understanding and lack of regulation in prepaid funeral plan sector. Regulation is urgently needed to prevent a Farepak-style scandal.

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.Read the full report

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:
• 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.

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