"It’s imperative the industry prepares now, ahead of its upcoming entry into financial services regulation."
In January, the Treasury made legislation bringing the sale and administration of funeral plans within the FCA’s remit, following concerns raised in the media and by consumer groups about the conduct and financial soundness of some pre-paid funeral plan providers. This will happen from July 2022.
The FCA says it will ban the sale of products which do not provide for funeral services in almost all circumstances on the individual's death.
To ensure that plans are sold fairly, it also plans to ban cold-calling, stop firms from using additional fees to drive profits and ban commission payments to intermediaries.
Consumers will also have access to the Financial Services Compensation Scheme and Financial Ombudsman Service from day one.
As funeral plans come under the FCA's remit, its regulation will extend to providers and intermediaries that arrange or advise on funeral plan contracts for customers. The FCA confirmed that this will include funeral directors and will writers.
Firms needing regulatory permissions can apply directly to the FCA for authorisation from September 2021 or, if appropriate, submit notification to become an appointed representative. The FCA said that firms should apply as soon as possible, as any applications made after 1st November 2021 may incur a higher application fee.
Sheldon Mills, executive director of consumers and competition, said: "Pre-paid funeral plans can help people and their families to manage the costs of a funeral. It is vital that consumers have confidence that their plan will deliver the funeral they expect at a fair value.
"The measures proposed today will help ensure that the industry serves consumers well.
"It’s imperative the industry prepares now, ahead of its upcoming entry into financial services regulation."
