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The Financial Conduct Authority has today (2 March 2021) published a Consultation paper which sets its draft rules and approach to regulation of funeral plan providers. Funeral directors are strongly urged to read the Consultation Paper and consider what FCA regulation will mean for them.

In particular, the NAFD is looking to ensure that funeral plan companies are required to:

• communicate more clearly with the consumer regarding where and how funeral plan funds are invested;
• be transparent regarding the value of any fees and sales commissions attached to the plan.
• inform funeral directors when a plan is being sold with their name against it as nominated funeral director and have the opportunity to agree the terms and for their decision be confirmed to the family before the standard ‘cooling off’ period ends.

In addition, there is information on future action you will need to take if you provide or sell funeral plans.

In particular:

• If you’re a funeral plan provider or sell funeral plans, you’ll need to apply to the FCA for authorisation or become an Appointed Representative. You will be able to apply for authorisation from September 2021.
• You will need to meet FCA standards to be authorised and, once authorised, follow its rules.
• Once authorised, you’ll need to pay an application fee and then annual fees, based on your turnover.

NAFD Chief Executive Jon Levett said: “The NAFD welcomes the introduction of statutory regulation to the funeral planning market. Around 200,000 funeral plans are bought by consumers each year and, given the negative impact of poorly sold funeral plans on both bereaved people and funeral directors trying to service the plans, this move will help to protect consumers from unscrupulous sales tactics and ensure that consumers can feel confident they are purchasing funeral plans that will cover the cost of the funeral they have chosen.

“We welcome today’s consultation as an opportunity to ensure the new regulatory framework will now be developed by the Financial Conduct Authority, is suitable and proportionate for what is a very small, niche market with a very different kind of product to other financial markets.”

The deadline for responding to the consultation is 14 April 2021 – there’s a link to the consultation below, as well as to the FCA’s dedicated webpage for more information.

https://www.fca.org.uk/firms/regulating-funeral-plans

https://www.fca.org.uk/publications/consultation-papers/cp21-4-funeral-plans-proposed-approach-regulation