January 2021, the Government passed legislation to bring the sale of funeral plans within the FCA’s regulatory remit. This decision was made following concerns that customers were not made aware of limitations on some packages, that multiple plans did not cover full costs and that commission-based sales were leading to pressure sales tactics.
The FCA have since held a consultation, which was published this week and lays out how the FCA will improve standards in the sector.
The FCA’s proposals intend to ensure that:
• products meet the individual needs of consumers – including through a ban on the sale of products which do not provide for funeral services in almost all circumstances on the individual’s death
• plans are sold fairly, including a ban on cold-calling to prevent consumers being pushed into taking out plans which may not be right for them
• the price of plans are fairly valued, with firms stopped from using additional fees to drive profits and a ban on commission payments to intermediaries
• consumers have access to the Financial Services Compensation Scheme and Financial Ombudsman Service from day one, should things go wrong
All companies in this industry now need to consider how FCA regulation impacts their business and begin to make the necessary preparations.
Over the coming months, the FCA will be providing a range of help and guidance to assist companies with preparing applications and getting ready to be regulated by the FCA.
The NFFD will keep you up-to-date with any more developments on this story.