Funeral Plans – check the small print

The send-off you paid for may end up underfunded, says Paul Lewis

A coin piggy-bank with

More than 150,000 people bought a funeral plan last year to pay in advance for their own send-off, either with a single payment or by monthly instalments. But the Financial Conduct Authority (FCA) has warned recently that many funeral plans do not do what is promised.

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Relatives may find that the funeral their loved one paid for is inadequately funded, and must pay more for the funeral they want.  So from next year the FCA will regulate the funeral plan industry to ensure plans do what they promise and are not mis-sold.

As of 29 July 2022, the regulator will only allow plans that guarantee a suitable funeral that is fully paid for when the buyer dies. It will be illegal to cold-call people to sell them a funeral plan, and the big funeral firms will also be banned from paying commission – typically £550 per plan – to agents who bring them customers. (A survey found that three in ten customers had bought their plan after high pressure selling.)

More than 1.5 million funeral plans are already in place. Some of those will have been sold by firms that won’t pass the strict tests the FCA will impose on all firms that want to remain in business after 29 July. These will not be allowed to operate, and should try to pass on or sell their customers to a regulated provider.  If they cannot do that they should refund customers – who will then have no plan in place.  The FCA admits that some customers may get back less than they paid in.

The average cost of a funeral is more than £4,000 so it’s not surprising that people worry about who will pay for it. But if your will leaves more than that, your loved ones can pay for your funeral out of your estate. If you have less than that to leave, you probably can’t afford to buy one in advance.  Most relatives would prefer you to spend the money on your own needs while you are alive and pay for your funeral themselves.

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Paul Lewis presents Money Box on Radio 4. To ask Paul a question please write to paul.lewis@radiotimes.com and he will endeavour to answer through his column