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Prepaid funeral sellers face crackdown from 2022 under new rules

Prepaid funeral sellers face a crackdown from summer 2022 when they're expected to come under the financial watchdog's regulation. It follows concerns vulnerable consumers may be being ripped off.

The industry is currently regulated by the Funeral Planning Authority (FPA) but firms can choose not to sign up to its code of practice, and in 2018, the Treasury found people at their most vulnerable were being pressured, harassed and misled by some prepaid funeral plan providers.

As such, the Financial Conduct Authority (FCA) is now set to take over in 2022 after a consultation in spring 2021 on how best to oversee practices.  

Under the shake-up, all firms offering prepaid funerals will have to be authorised to operate – or face having to close down. Ensuring consumers receive what they've paid for is among the watchdog's aims. 

The FCA also plans to ensure customer funds are looked after and used responsibly. Currently, providers must legally invest customers' money to pay for funerals in an insurance policy with a regulated insurer or a trust fund with independent trustees. See our Prepaid Funeral Plans guide for more information on how these work.

What are prepaid funeral plans?

Prepaid funeral plans typically allow anyone aged over 50 (but as young as 18 with some) to pay for and set out the arrangements of their own or someone else's funeral now, so when they die, their family will have little financial and/or organisational responsibility. 

They cover many of the costs associated with a funeral, such as a coffin and a hearse. However, they won't cover all costs, and one of the major issues is that plans aren't covered by the Financial Services Compensation Scheme, which means cash could be at risk if the provider goes under.   

Use our Prepaid Funeral Plans guide to check if a plan is the right choice for you.

What does the funeral industry say?

An FPA spokesperson said: "We continue to believe that FCA regulation is the wrong policy and that the timing is particularly unfortunate given the current challenges faced by the market. We remain particularly concerned that the policy will in itself cause consumer detriment as some providers do not seek, or cannot achieve, FCA authorisation.

"We will, however, endeavour to do what we can to ensure a smooth transition to any new regime and to assist where we can in trying to ensure that the new regime is built on a sound understanding of the wider market."

Separately, crematoria and funeral directors have recently been blasted for increasing fees above inflation over the past decade and for not being clear on prices. 

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