Dignity publishes White Paper calling for stronger regulation of the funeral plan sector

New research evidences conduct improvements but misleading practices continue

Dignity has today set out its plan for a stronger form of regulation in the funeral plan sector. This detailed document explains how regulation can be improved to better protect consumers.

Dignity’s White Paper - 'Strengthening regulation in the funeral plan sector' - sets out a detailed vision for what stronger but proportionate regulation in the funeral planning market should look like. The paper has been developed with regulatory experts and follows the report Dignity conducted with Fairer Finance in July 2017, which highlighted misleading advertising and aggressive telesales methods.

Research, conducted for Dignity, by Matter Communications in March, shows that whilst improvements are evident since Dignity first raised awareness of the problems in the funeral plan sector last year, significant issues remain. The research finds new providers (for example Capital Life, Empathy Funeral Plans and Prosperous Life) entering the market, alongside many of the providers identified through last year's activity some of whom work with websites purporting to be "comparison sites" and sell plans via telesales agents  who use high pressure sales calls to generate their sales.  None of these providers are registered with the Funeral Planning Authority (FPA).

On a positive note, the research suggests a reduction in the volume of call centre activity, and some improvement in conduct. During this period the FPA have been pro-actively engaging with FPA and Non-FPA firms to raise their game, campaigning for funeral directors and customers not to use non–FPA registered firms, and actively reviewing its rule-book and code of conduct.

Dignity’s White Paper will feed into the FPA's review of its rules and considers, amongst other factors, why stronger regulation is necessary, what regulation currently exists in the funeral plan sector, what the expected outcomes of enhanced regulation of the funeral plan sector might be and what the conduct and prudential rules should cover.

Key amongst the proposals set out in the White Paper is a model of stronger regulation that would see the existing Funeral Planning Authority (FPA) placed on a statutory footing with all firms compelled to register with the regulator in order to trade.  

Dignity's proposed approach to regulation set out in the White Paper is based on many of the principles that underpin the Financial Conduct Authority (FCA), Prudential Regulation Authority’s (PRA) and the Pension Regulator’s existing approach to regulation, and includes:

  • Compulsion of all plan providers to be covered by the regulator, together with adequate powers for the regulator to ensure appropriate enforcement including license to trade.
  • Applying new minimum standards to both plan providers and distributors of funeral plan products, both in terms of construction, promotion and management, as well as suitability and capability of individuals responsible for performing appropriate tasks.
  • Ensuring that any proposals are proportionate and recognise the differing nature, size and complexity of the business models of various participants in the funeral plan sector whilst respecting the principle that there needs to be an agreed set of minimum standards.
  • Recognition that any new set of regulations will require an appropriate period of transition to allow individuals and firms to migrate existing business practices to the new rules.
  • Setting out fifteen key principles that conduct regulation should follow covering areas including product oversight, dealing with vulnerable customers, the role of management, and oversight and governance of distribution channels.
  • Setting out clearer prudential rules, including establishing rules for a minimum solvency margin and putting in place ongoing monitoring of the solvency of funeral plans.

Simon Cox, Dignity’s Head of Insight and External Communications said, "Following the research we conducted last year and the report with Fairer Finance, it was important to maintain momentum. We have seen growing support amongst policy makers and consumer groups for action and have therefore drafted a White Paper detailing a stronger form of regulation which will better protect the consumer."

"Our recent research shows that while improvements in conduct are evident many of the issues identified last year remain. Our recent research shows that while improvements are evident there remains significant issues facing consumers from funeral plan providers and distributors that are not registered with the FPA.

The FPA is the natural solution to improving standards in the sector due to its expertise and understanding of how the market works, and the important steps it has taken in recent years to strengthen its independence and processes. In many ways the existing FPA rules are, as can be evidenced by our White Paper, a good platform on which stronger regulation can be built. Our advice and preference would be for a statutory FPA but if this is not feasible, FCA regulation would be preferable to the status quo.

Dignity prides itself on its excellent quality and standards that it offers the industry, both with its funeral plans but also with the facilities and care that it provides for the deceased and the bereaved. The whole funeral sector needs stronger regulation and our work on the funeral plan market is just the start. With statutory regulation in place, we hope that the industry will together work better for the consumer."

Dignity has co-sponsored a follow- up report by Fairer Finance along with a number of other FPA registered providers. The report looks at what it would take for stronger regulation to be placed onto a statutory footing and will be published later this month.

For any media enquiries, please contact Simon Cox, Head of Insight and External Communications, at simon.cox@dignityuk.co.uk


Dignity Funeral Plan Regulation White Paper

Matter Funeral Plan Research Summary


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