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‘Shameful’ tactics in funeral plan sales to be stamped out

The use of high pressure and misleading tactics in the sale of funeral plans will be brought to an end, the City minister John Glen has said.

New plans to regulate the pre-paid funeral sector for the first time will ensure that the market is competitive and consumers, who are often old and vulnerable, understand what they are buying.

The regulation of the sector will now be overseen by the Financial Conduct Authority (FCA). It will design a new, robust framework to bring regulation in line with other financial products, such as insurance, and ensure that providers are clear and fair in their treatment of customers. This will also offer people access to the Financial Ombudsman Service, enhancing consumer protection.

The move comes after a recent call for evidence showed widespread concerns around the conduct of funeral plan providers, with some employing high pressure and misleading sales tactics in order to get customers to sign up to plans.

Under these new plans, anyone found breaching the regulations can have their authorisation revoked, face fines and even criminal charges.

Demand for funeral plans has grown by nearly 200 per cent between 2006 and 2018. Last year, 177,000 plans were sold and cost on average between £2,500 and £5,000. The legislation governing their oversight has not changed since 2001 and needs to be updated to address disreputable practices.

One example of this is when third parties working on commission – like door-to-door salesman – pressure customers to buy plans in order to maximise their commission rather than to meet that person’s specific needs.

Although a regulator already exists, it operates on a purely voluntary basis and companies can choose not to sign up to the rules.

(Published by HM Treasury: 1 June 2019)