Moves are under way to protect vulnerable people from “rip-off” pre-paid funeral plan providers.
The Treasury is proposing to bring the sector under the regulation of the Financial Conduct Authority after claims that elderly people are being “pressured, harassed and misled” by some funeral businesses.
Demand for funeral plans has grown rapidly, with annual sales rising by about 245% between 2006 and in 2017, but regulations have remained the same since 2001.
Currently, 95% of the market is voluntarily regulated by the Funeral Planning Authority but the FPA is not able to stop providers from trading and its code of practice is not legally binding, ministers say.
Fairer Finance managing director James Daley said: “People who buy funeral plans are not around to measure delivery against their expectations, which is why it’s so important there are clear rules around how companies must behave.
“With most plans costing over £3,000 – it’s important that customers can have total confidence that their money is safe.”
Economic secretary to the Treasury, John Glen, said: “I’m appalled by the lengths that some dishonest salesmen have gone to in order to sell a funeral plan.
“It breaks my heart to think that our oldest and most vulnerable are being pressured into funeral plans that leave their grieving families out of pocket.
“There are thousands of pre-paid funeral plans bought each year and most providers are fair and legitimate.
“But tougher regulation will ensure robust standards are enforced for all plan providers and protect individuals and their families if things go wrong.”
Simon Cox, from funeral provider Dignity, said: “Our research has shown that bad practices like persistent and pushy cold-calling are rife among firms that have no oversight from a regulatory body.
“Most consumers wrongly believe that their plan is regulated by the FCA, when in fact they aren’t.
“The majority are registered with the industry’s own voluntary regulator, but there are a growing number of new providers taking advantage of a regulation gap and not regulated at all.”
Mr Cox said the FPA regulation was “the right option” but the organisation would be a more effective regulator if it had “more teeth”.
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“However, what is most important is that the regulation gap in the sector is filled,” he added.
Shares in Dignity were down 9% at the start of Friday trading.
Source: Sky