Funeral plans

Many people decide to pay upfront for a funeral plan. In essence, this is a financial product which enables someone to cover the full cost of their funeral in advance.  This can give people peace of mind and helps them to ensure that their loved ones do not have to deal with these issues on their death.

A funeral plan can also 'future proof' the cost because it can help to avoid inflation and secure the price of the funeral which can be very expensive. There are some risks, however, not least the possibility of the company going out of business. In addition, the money paid into a funeral plan can only be used for that purpose rather than wider purposes if paid into a generic insurance policy.

The Financial Conduct Authority (FCA) has identified a number of other risks relating to funeral plans including:

  • plans that do not meet customers' needs or expectations, for example those paid by instalments that do not guarantee a funeral service
  • the use of high-pressure sales tactics
  • plans going unclaimed because the consumer's families do not know about them
  • poor financial management of trusts, meaning that there may not be sufficient funds available to cover funeral costs.

It is for the above reasons that the FCA has introduced a new authorisation procedure. Anyone wanting to take out a funeral plan should check that the funeral plan provider is properly authorised by the FCA.

From 29 July 2022, any funeral plan provider that is not authorised by the FCA will be committing a criminal offence if it attempts to sell or administer a funeral plan contract. The FCA advises anyone who has funeral plan or who is thinking about buying one to check the status of the provider before July 2022.

The FCA has a list of providers on its website and it specifically advises people buying a new plan not to purchase one from a provider that does not intend to apply for authorisation or that has had an application refused or withdrawn. Rather worryingly, it is reported that around 40% of funeral plan providers are yet to apply for FCA regulation.

Solicitors are not qualified to give financial advice, nor should they. However, they can provide invaluable peace of mind and support when helping someone to prepare a will. Having a will prepared by a properly qualified professional not only minimises the risk of the will being incorrect but it also provides protection for the person making the will and possibly their family because professional advisers have to have appropriate insurance in place. There can be an element of the 'wild west' when it comes to providers of writing services in that all are not properly regulated and insured.

If someone making a will has taken out a funeral plan, their solicitor should ask for details of the plan and place it with the will. If someone has not yet taken out a funeral plan is thinking of doing so, the solicitor can at least check the FCA website to establish which funeral plan providers are properly regulated.

To discuss this or any other wills and probate matter, contact us.

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