Field of wild flowers.

Fairer Funerals

Co-op urges Government to act now and protect vulnerable consumers through FCA regulation of funeral plans

We're calling for reform of the funeral planning market

  • We call for increased transparency, enhanced financial protection and a ban on aggressive sales
  • As UK’s leading plan provider we welcome Fairer Finance report looking at pathways to regulation

We're calling for urgent reform of the funeral planning market in order to provide greater financial protection for the 200,000 consumers who now invest in these products annually.

As the UK’s leading funeral provider, we have written to Treasury, the FCA and other key consumer and financial organisations highlighting that the current voluntary model of regulation for funeral plans is not sufficient to meet growing customer needs. We are calling upon Treasury to consult on statutory regulation.

We're asking the Government to act now to protect vulnerable customers by fully assessing a future model for regulation under the FCA. We believe this is the most effective route to drive up standards, eradicate poor sales practices and increase financial protection for funeral plans. FCA regulation would also stamp out poor practice by introducing appropriate sanctions for those firms who fail to meet these standards.

Our calls come as consumer group Fairer Finance releases its second report into the funeral plan sector, entitled “Towards regulation of the prepaid funeral planning market.” We are the only plan provider to call for FCA regulation within the report.

Over the last five years the funeral planning market has grown rapidly by more than 50 per cent and 1.3 million plans are already in place across the UK. In 2017 alone over 200,000 funeral plans were taken out with almost 90,000 families using a plan to help meet average funeral costs of approximately £3900.

The practices adopted by a minority of providers in this growing market has left consumers exposed to poor sales practices. We're also concerned about the limited financial protection on offer with some plans. We've told the Government that this poses a future financial risk to consumers, particularly vulnerable or older clients, who are being encouraged to take out products that lack transparency and don’t provide appropriate financial cover for eventual funeral costs.

Recognising that a consultation on regulation is not an immediate fix, in the interim we are calling upon all plan providers and those marketing plans to take positive steps to drive up standards by meeting the following minimum standards:

  • Commission – A commitment from plan providers to be fully transparent on any commission taken out of plans either for their own staff or for business introducers / sellers
  • Investment transparency – Providers should publish full details as to where client money is invested and how much they have reserved against each plan
  • Comparison sites – A ban on all sites claiming to be independent and misleading customers about selling plans from all providers
  • Sales practices – A ban on outbound commission driven leads based telesales activity

A Co-op spokesperson commented, “We’re focused on driving greater transparency for customers in the funeral planning market and welcome today’s report from Fairer Finance.

“Due to the comprehensive nature of our plans, over 69,000 families purchased a plan in 2017 and a further 20,000 families benefit financially on average each year from their loved one having put in place a plan with Co-op Funeralcare. Independent personal finance experts have also recognised our plans as amongst the best on the market.

“Sadly not all plan providers offer this financial protection. Today’s report highlights that the sales practices of a minority of providers are putting thousands of vulnerable consumers at risk financially. We believe this needs to be urgently dealt with, and we are supportive of statutory regulation under the FCA as the most comprehensive route for this being achieved.

“We recognise that statutory regulation will take time, and are engaging with the FPA and its other members regarding measures to improve the market in the interim.”

About our plans

We were recognised in the Fairer Finance report for having removed staff sales incentives on plans, for publishing details regarding the health of funeral plan funds and for offering enhanced cover and financial protection for clients under the Financial Services Compensation Scheme.

Our plans have been recognised by independent consumer groups Fairer Finance and Moneynet as amongst the most comprehensive on the market, with Co-op becoming the only plan provider to receive the Fairer Finance Clear and Simple Mark. Earlier in the year, we became the only UK plan provider to launch an additional commitment with increased financial protection for customers paying monthly for their funeral plan.

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