From this week, all funeral plans and the firms that provide them will be regulated by the Financial Conduct Authority. The new rules, which begin on 29 July, mean that only regulated firms can sell funeral plans, and all their plans will be protected by the Financial Services Compensation Scheme, even those sold before 29 July. If the firm that provides the plan goes bust or it turns out the plan was mis-sold the customer can be compensated.
Most of the 1.8 million people with a plan will be with one of these safe, newly regulated firms. However, around 30 firms will not be authorised, and their 80,000 customers are unprotected, These firms have either been refused permission to continue or are leaving the business. Some hope to transfer their customers to regulated firms. But not all will succeed, leaving customers without a plan and with no redress. Check the status of your plan provider at fca.org.uk – search “funeral plans”.
One firm, Safe Hands, has already gone bust, leaving its 40,000 customers in limbo. Currently if a funeral is needed then a basic one will be provided by Dignity – one of the large, approved firms. But the long-term solution is far from clear. Safe Hands customers can call 0800 640 9928 to find out more, or visit the website safehandsplans.co.uk, which is now run by administrators.
Even though the funeral plan business will be regulated in future, and commission payments and cold-calling banned, I am still not a fan of them. The average cost of a basic funeral is around £4,000. If you will leave more money than that, your relatives will have enough to pay for it, and would probably prefer to choose how you will be laid to rest. Any decent funeral firm will wait for payment until the estate has been settled.
If you will not leave enough, then most relatives would prefer that you spend what money you do have to give yourself as good a life as you can in your final years.
Paul Lewis presents Money Box on Radio 4. To read more of his advice, see radiotimesmoney.com QUESTIONS? Send any questions to Paul.Lewis@radiotimes.com.