Over-50s pressured to buy unregulated funeral plans

7 July 2017

Providers of pre-paid funeral plans are using high pressure sales tactics to encourage over 50s to buy their policies, according to a new report.

These plans allow people to effectively purchase their funeral before they die, providing the peace of mind that expenses, including burial or cremation costs, funeral directors’ and ministers’ fees, will be covered when the time comes.

However, new report “Is the prepaid funeral market working well for consumers?”, which was put together by independent consumer group Fairer Finance in partnership with Dignity Funerals, found that a lack of regulation, underhand sales practices and a lack of consumer understanding were conspiring to brew a “perfect storm”.

Plus, despite 75% of consumers believing their plans are covered by regulator the Financial Conduct Authority (FCA), the plans – which feel like a financial services product – are not regulated.

As such there are less controls on the way products are sold and less protection for consumers if they feel they have been mis-sold.

Prepaid funeral plans are widely considered to be a useful way to plan for funeral costs and in the 10 years to 2016 sales have grown by close to five times, with some 1.2 million consumers now owning a plan.

The report attributes the massive growth in the market to high pressure sales tactics. It found that half of over 50s have been contacted by a provider of funeral plans and of those, 49% had been re-contacted by the same firm two or more times, 46% said they felt pressured to buy, and 63% said the additional communication was unhelpful.

More worrying still, is that it emerged that buyers often didn’t understand the product they were buying – with confusion surrounding what was and was not covered. In particular, there was concern around ‘contribution’ style plans, which only fully cover the funeral director’s fees, paying only a contribution towards other expenses, such as a cremation.

Only guarantee style plans promise to cover a range of specific costs.

The report also questioned the safety of policyholders’ money and revealed that there is no safety net if the provider was to become insolvent.

‘A growing number of customers are likely to be let down’

Commenting on the findings, James Daley, founder of Fairer Finance says: “Funerals have become ever more expensive over the past decade, and pre-paid plans can be a great way of locking in today’s prices, whilst also ensuring your family isn’t left with this significant financial burden after you’re gone. Although there are some reputable providers working in the interests of consumers, the sector has rapidly expanded over the last few years, with our research revealing a worrying number of conduct issues and lack of consumer protection.

"The combination of a fast-growing market fuelled by high pressure sales to a potentially vulnerable customer base is creating a perfect storm. A growing number of customers are likely to be let down when their plan is claimed on – with some funeral plan providers passing on significant extra costs to the families. And there is a concern that client money is not always being adequately looked after. Without intervention, we may yet see a Farepak-style collapse in this market, which leaves thousands of customers out of pocket.”


In reply to by anonymous_stub (not verified)

Just been repaid by Bank after complaining of being mis sold a funeral expenses life cover policy by Nationwide 5yrs ago. 5 yrs payments refunded by Bank . Sunlife the actual company refused to do anything and my premiums are rising from original £ 25 per month to ££50 per month until age 90. Beware. OK refunded premium but what about the 5 yrs accumulaion of bonus and who can I trust to start afresh. If I stop paying sunlife they give nothing back so one loses everything !!! Beware ..

In reply to by anonymous_stub (not verified)

Thanks for your comment. There are quality providers out there so there is not automatic 

cause for alarm. Your best option is to dig out the paperwork you received when you took 

out your plan or if you dont have it contact the company who sold it to you. This

should tell you what you are and are not covered for. 

In reply to by anonymous_stub (not verified)

Well thanks for that now I am worrying the Funeral plan I just bought for me and my husband will be no good....How will I know? I bought this plan to stop myself worrying about being a financial strain of my family and now you come away with this.....

In reply to by anonymous_stub (not verified)

I am 61, and despite being signed up to TPS, I am constantly plagued with these 'prepaid funeral plan' cold calls. Record so far is over over 10 calls in 3 days from different companies. One particular caller was so insistent that the only way I could get rid of her (other than to rudely hang up on her) was to agree to her sending me their brochure, which I threw in the recycling box as soon as it arrived. The female caller just wouldn't take 'no, thank you' for an answer. I was exhausted and, frankly, close to tears after her call. The methods of these companies need to be seriously looked at.

In reply to by anonymous_stub (not verified)

Funeral costs.In the London area, have a look at basic funeral costs with Poppy's Funerals. last time I checked it was £1950 ish for a cremation. No add-ons, no certificate fees etc.

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