- Failure to adapt to FCA regulation in time will see firms struggle to compete
- FPA registered firms best placed to respond to imminent regulatory changes
- Advisers should only consider FPA registered firms when selected a funeral plan for clients
Funeral planning firms that are not registered with the Funeral Planning Authority (FPA) are looking increasingly like an ‘endangered species’, according to Mark Moran, Director of Partner Sales at Golden Charter.
Moran believes that if these businesses do not respond soon to the regulatory winds of change in the funeral planning market, they will struggle to sell plans to advisers and consumers as more scrutiny is placed on pre-paid funeral plans.
The government recently announced proposals to bring regulation of the pre-paid funeral plan industry into the remit of the Financial Conduct Authority, after it discovered evidence of consumer detriment in the market.
Under current rules funeral plans are exempt from FCA regulation, but the FPA exists to protect consumer interests in the sector. It regulates providers, but membership is on a voluntary basis, and Moran believes this will be what sets apart providers as we await clarification from the FCA on how the regulatory regime will work.
Mark Moran, Director of Partner Sales, Golden Charter says:
“It is imperative that if advisers are to consider a funeral plan for their clients that they look out for those who are registered with the FPA, a stance backed up by HM Treasury. Much of the consumer detriment witnessed has come from those firms who are not FPA compliant, and there is a real concern that many have not cleaned up their act and will continue to use questionable tactics.
“While we await the FCA’s decision on how best to regulate the industry, the FPA will play a crucial role in continuing to enforce its strict code of conduct and help consumers should they run into any difficulties. The FPA values transparency and requires providers to have an annual actuarial valuation of their trust, and there are providers out there, including ourselves, who exceed these standards. As such, any provider worth their salt should be signed up to the FPA’s guidelines at a minimum or risk becoming an endangered species.”
FPA rules state that funds paid towards a funeral plan must be looked after independently of the provider, generally in a trust fund or a whole of life insurance policy. As a result Moran stressed that advisers need to be comfortable that a provider’s trust is funded correctly and appropriately, something that will only come from an FPA firm.
Moran also believes that advisers need to be confident that prospective providers are well prepared for FCA regulation, and that being a FPA member should set them apart from other firms.
“Those that have been under the auspices of the FPA for some time are well positioned for this brave new world, and indeed we have been planning for FCA regulation for some time now. The proposal published by the FCA describes in some detail the close parallels to be drawn with other FCA markets such as the insurance sector. As such, this is a largely known model, and those who are FPA registered will have been planning for it since at least 2017,”