House of Commons · Westminster Hall
26 May 2022 · 4 other contributors · 10,842 words
Opened by Lucy Allan Con Telford
Responding minister: John Glen
Summarised by AI from the official record, so it can contain mistakes.
Lucy Allan raised concerns about funeral plan industry — [judith cummins in the chair] in Westminster Hall. A government minister responded.
Key points
Key requests to Government
Allan urged the Financial Conduct Authority (FCA) to maintain its regulatory proposals without watering them down. She stressed that funeral plans are savings and investment products targeted at vulnerable people, who should have the same level of protection as anyone else buying a financial product. Allan called for accountability from industry players and a duty to protect vulnerable customers.
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
Lucy Allan highlighted that 1.6 million people hold funeral plans and 218,000 new plans were taken out last year with over £4 billion in funds under management held in plans. She pointed out the industry's use of high-pressure sales techniques, lack of transparency about investments, and concerns raised by Safe Hands Funeral Plans entering administration, leaving plan holders with a return of between 10p and 20p in the pound after paying their 25% commission.
The collapse of Safe Hands, a prepaid funeral plan company, left 45,000 customers distressed, with many losing up to 90% of their invested money. The MP questioned the Government's awareness of risks in the sector and the adequacy of regulatory responses.
Concerned about funeral poverty, unregulated funeral industry prices, and inadequate Government support for those in need. Emphasised the high costs of funerals, highlighting that 17% of families experienced financial concerns, with an average cost of £4,056. Called for regulation of funeral director services, simplification of eligibility criteria for Funeral Expenses Payment (FEP), and creation of statutory minimum standards for public health funeral provision.
Does the hon. Lady share my concerns about some of the practices and sales techniques that are used to get people to sign up to these plans? She has already mentioned that people are vulnerable, but when we read the small print in the glossy brochures that are provided, it is clear that these plans do not actually deliver what has been promised to many people. Does the hon. Lady agree not only that it needs to be clear what people are purchasing, but that if the people selling the plans are receiving commission—in some of the examples I have come across, the third party selling them has been on commission—that should be clearly stated, too? Mr Kevan Jones expressed concern about the vulnerability of individuals who were misled by Safe Hands Funeral Plans, stating that these people were taken advantage of through a scam. He highlighted instances where constituents received only 10% to 20% of their invested money back and suggested investigating whether criminality had occurred within the company. Expressed fear over other companies like Safe Hands continuing to trade without proper regulation and questioned the FCA's powers to force closure of fraudulent schemes, seeking assurance on a date by which selling funeral plans would require either FCA coverage or alternative protection.
Highlights the marketing tactics of funeral plan companies, including direct TV advertising. Discusses Safe Hands scandal where £4 million in customer investments was misappropriated with only about one fifth expected to be returned due to high-risk investments. Urges regulation by Financial Conduct Authority from 29 July and calls for a safety net for customers left high and dry.
Government Response
John GlenSaid it is a pleasure to serve under the chairmanship and thanked Members for their contributions. Addressed concerns about Safe Hands entering administration, noting Dignity's actions to provide funerals for affected customers at no additional cost. Highlighted the need for better regulation in the funeral plan market due to the example of Safe Hands. Emphasized that firms either go through FCA regulation or become appointed representatives under a bigger firm's oversight by July 29th. Mentioned the growth in funeral plans from 2016 to 2019, noting a 175% increase. Stressed the Government's role in ensuring proper regulation and protecting consumers while minimizing disruption for providers during transition. Indicated that the FCA will ensure businesses meet new standards or wind down before July 29th. Reiterated that no precedent will be set for government compensation of Safe Hands customers, but praised Dignity's actions as an industry leader. Concluded by emphasizing a well-regulated market promotes effective competition and benefits consumers over the long term.