What does Financial Conduct Authority (FCA) regulation mean to customers?

Regulation of pre-paid funeral plans by the Financial Conduct Authority (FCA) is set to commence on 29 July 2022. The FCA website (www.fca.org.uk) has some useful information about what FCA regulation means and how it may affect you as a customer. We have provided some answers below to a range of questions regarding FCA regulation.

What Does FCA Regulation mean?

According to the FCA, regulation of the funeral planning market will provide customers with enhanced protection when it comes into effect from 29 July 2022. Funeral Plan Providers will need to apply to be authorised by the FCA. Any firm not authorised, will need to cease selling and managing funeral plans from 29 July 2022, as it will become a criminal offence to continue to operate without FCA authorisation.

What will happen to existing plans of providers who do not gain authorisation from the FCA?

Firms that are not authorised or exempt from 29 July 2022 will not be permitted to carry out regulated activities for funeral plans. It will be a criminal offence to enter into new funeral plan contracts or for plan providers to carry out existing funeral plan contracts without authorisation beyond this date. The FCA expects firms that are not approved for authorisation to transfer their books of business or otherwise wind down in an orderly way before regulation begins.

How will I know if my Plan Provider has applied for FCA authorisation?

The process for providers to apply for authorisation will opened September 2021. For specific information regarding your plan provider, our advice would be to speak to your plan provider directly and / or check the FCA website which has a summary page regarding the progress of providers’ application for authorisation with the FCA. https://www.fca.org.uk/consumers/funeral-plans/providers-list

If my Plan Provider does not gain FCA authorisation, will I have the option to cancel my plan, or will I be forced to accept the transfer to a new provider?

The circumstances around each firm mean that it is not possible to be definitive in terms of what the arrangements will be. The FCA has encouraged firms who will not be seeking authorisation to plan how they will exit the market. We suggest customers with any concerns speak directly to their Plan Provider.

Who should I contact to raise a complaint after 29 July 2022?

Once FCA regulation has begun customers buying a plan after that date will be able to escalate complaints to the Financial Ombudsman Service (FOS). If the complaint relates to a plan sold before 29 July 2022, you will be able to refer to FOS providing the plan provider was registered with the Funeral Planning Authority at the time the issue causing the complaint occurred.

Am I still able to buy a funeral plan now or should I wait until FCA regulation?

Funeral Plan Providers are still able to sell new funeral plans. In deciding whether you should wait until FCA regulation, a key consideration is whether your proposed Plan Provider is seeking authorisation and if not, what are their proposals for the fair treatment of existing plan holders after 29 July 2022.

Will FCA regulation lead to reduced competition in the market and therefore increase prices of funeral plans?

The impact on competition is unclear, we believe that some providers will not continue to operate under the FCA’s new regime and for those that do, some costs of complying with the new regime may be passed onto the customer. However, the FCA believes that this cost increase will deliver funeral plan products, which are better suited to the needs of the customers.

What will happen to the Funeral Planning Authority post FCA regulation?

As the regulation of the pre-paid funeral planning market will move under the FCA remit from 29 July 2022, it it our intention that the FPA will no longer be operational and will cease business from that point in time.