Statutory regulation by the funeral planning authority would better service customers

Golden Charter backs call for mandatory membership of the FPA, with enhanced rules and sanctions available  Welcomes call for evidence by HM Treasury
Statutory regulation of pre-paid funeral plans and wider powers for the Funeral Planning Authority (FPA), rather than through the Financial Conduct Authority (FCA), would ensure continuing consumer protection, one of the UK’s leading funeral plan providers has argued.
Golden Charter is calling for statutory regulation by the FPA, with enhanced powers, a single focus on the funeral sector, and the ability to regulate across the full life of a funeral plan, as it would better serve IFAs and consumer interests, as well as provide the market with a focused regulator.
Golden Charter believes that if the market were to be regulated by the FCA it could put the choice of the funeral director for an intermediary’s client at risk as it would impose a regulatory burden that does not recognise the nature and size of a funeral director’s business.
While the majority of pre-paid funeral providers are members of the FPA, the self-regulatory body which exists to protect consumers’ interests, membership is voluntary. This means that some providers and intermediaries are operating without an independent body to hold them to account. As a result, Golden Charter is one of a majority of firms who are calling for the FPA to have more enhanced powers available to them and for membership to become compulsory.
HM Treasury has recently been consulting on the performance of the funeral plan market, the potential for customer detriment and the future structure of regulation in this market.
Mark Moran, Golden Charter’s Director of Direct Sales, said: “We welcome the call for evidence by HM Treasury and hope we can get to a point where consumers, and intermediaries, fully understand what they are getting when they take out a funeral plan, as well as ensuring any questionable practices are removed from the industry.
“As a founding member of the Funeral Planning Authority, consumer protection has long been a priority for Golden Charter and we strongly believe the best way forward when it comes to regulation is to make membership of the FPA mandatory and provide it with statutory powers so it can hand out appropriate sanctions.
Golden Charter, which is owned by an association of around 750ndependent funeral directors situated throughout the UK, also believes moving to an insurance only backed model as suggested by some commentators would not be the best way forward as it would preclude the majority of existing contracts and as only four insurance companies currently underwrite such contracts such a move could remove competition in the market. Golden Charter sees a compelling argument to retain both Trust backed and insurance backed options.
Mark continued: “Funeral plans play an important part in later life planning, particularly as funeral costs have outstripped inflation in recent years. As such it is important that customers and intermediaries know they have the flexibility when it comes to paying for the funeral plan, as well as understanding what they will receive at maturity. We believe in offering a wide range of payment methods to ensure customers can select the option that best suits their individual circumstances, and our independent Trust allows just that. Our low cost instalment payment option is an alternative to insurance-backed payments, offering similarly low premiums while ensuring any money paid in is not lost if payments stop.”
All funds* received from the sale of funeral plans by Golden Charter Ltd are paid into the Golden Charter Trust. The Trust is a fund whose assets are entirely separate and independent of Golden Charter Limited. The most recent actuary’s report at March 2017 showed that the Trust’s assets were valued in excess of 100% of the funds required to meet future invoice costs in respect of all the funeral plans in the Trust, allowing for increases in funeral costs in line with future levels of inflation as measured by the Consumer Price Index.
*If the fixed monthly payment option is selected, funds are paid into a UK based life assurance company.