How Your Money Is Protected
If you’re considering paying for your funeral years before it may be needed, it’s completely reasonable to ask the question about what happens to the money you pay.
Are prepaid funeral plans safe? How is my money protected?
In the UK, the Financial Conduct Authority (FCA) regulates prepaid funeral plan providers. Providers must be authorised and have the appropriate permissions, and eligible customers of authorised providers can have access to protection from the Financial Services Compensation Scheme (FSCS) if their provider fails.
However, that doesn’t mean you should buy a funeral plan without doing some research first.
Understanding who regulates your provider, how your money is protected and what you’re buying can help you make a more informed decision.
Are prepaid funeral plans safe?
There are important consumer protections surrounding regulated prepaid funeral plans. The funeral plan market has changed significantly in recent years.
Since 29 July 2022, the FCA has regulated firms that provide and carry out funeral plan contracts in the UK.
Providers must meet regulatory requirements, and consumers dealing with appropriately authorised firms can have access to protections that wouldn’t be available when dealing with an unauthorised provider.
Before buying a funeral plan, make sure the provider is FCA authorised and has the correct permissions.
Who regulates funeral plans?
The Financial Conduct Authority (FCA) regulates prepaid funeral plans in the UK. The FCA requires funeral plan providers to be authorised and have permission for the appropriate activities.
You don’t need to take a company’s word for it. You can use the FCA’s Firm Checker HERE to search for the provider yourself and check its permissions.
That’s something we’d encourage anyone considering a funeral plan to do, including people considering one of ours.
What protection do I have if my funeral plan provider fails?
Eligible funeral plan customers can have protection through the Financial Services Compensation Scheme (FSCS).
If an authorised funeral plan provider goes out of business, it should have arrangements in place to ensure that another regulated provider can carry out customers’ plans or to provide compensation.
If those arrangements aren’t in place, the FSCS may protect eligible plan holders. Current FSCS protection for funeral plan claims is up to £120,000 per eligible person, per firm.
Where possible, FSCS may seek to provide a replacement regulated funeral plan on the same terms as the original.
Are all funeral plans protected by the FSCS?
You shouldn’t assume that simply owning something described as a “funeral plan” automatically gives you FSCS protection; eligibility matters.
The funeral plan provider needs to be appropriately FCA regulated, and FSCS rules and eligibility criteria apply. This is another important reason to check the provider’s regulatory status before purchasing.
How does Funerals with Grace protect plan holders’ money?
Plan with Grace Ltd T/a Funerals with Grace is authorised and regulated by the Financial Conduct Authority.
When you purchase a pre-paid Funeral Plan through us, the money to pay for your funeral is held securely in a ring-fenced trust, and eligible customers also benefit from the protections available through the FSCS.
The purpose of the trust arrangement is to keep the funds set aside for funeral plan obligations separate.
As with any regulated financial product, you should read the relevant plan and trust information carefully, so you understand how the arrangement works and what protections apply.
What does FCA regulation mean for customers?
Regulation shouldn’t be seen as just a logo at the bottom of a website. FCA regulation brings funeral plan providers within a regulatory framework covering how products are sold and administered, and how customers are treated.
Using an appropriately authorised provider can also give consumers access to routes of redress and compensation that may not be available when dealing with an unauthorised business.
For example, the FCA warns that customers using an unauthorised funeral plan provider won’t have access to the Financial Ombudsman Service for complaints or the FSCS if the firm fails.
What should I check before buying a funeral plan?
Even in a regulated market, you should still choose carefully.
- Check the provider is FCA authorised – Use the FCA Firm Checker rather than relying solely on a logo on a website.
- Understand how your money is protected – Ask the provider to explain its arrangements clearly.
- Check what’s included – Understand the funeral you’re purchasing, including what’s included and excluded.
- Understand your payment terms -If you’re paying by instalments, check the total amount payable, whether charges apply and what happens if payments stop or you die before completing them.
- Read the documentation – Take time to read the plan documents before committing.
- Look for independent evidence – Customer reviews and independent ratings can provide useful additional information, although they shouldn’t replace your regulatory checks.
For example, Funerals with Grace’s Direct Cremation plans have been independently rated 5 stars by Fairer Finance for transparency and quality.
What are the warning signs to look for?
Be cautious if:
- You can’t establish who the actual funeral plan provider is
- You can’t find the provider on the FCA Firm Checker
- You’re being pressured to make an immediate decision
- Important exclusions aren’t clearly explained
- You’re told not to worry about reading the terms
- You don’t understand how your money will be protected
- Claims about guarantees or protection seem vague
- The company avoids answering straightforward questions.
A funeral plan is something you may hold for many years, so taking another day to check the details is unlikely to hurt.
Are funeral plans safer now than they used to be?
The introduction of FCA regulation in July 2022 represented a significant change in consumer protection within the prepaid funeral plan market.
Before regulation, the market didn’t operate under the same FCA framework that applies today. Consumers buying plans now can check authorised providers through the FCA and, where they meet eligibility requirements, may have access to the Financial Ombudsman Service and FSCS protections.
However, regulation doesn’t remove the need to understand what you’re buying. A provider can be regulated and still offer a plan that doesn’t suit your particular wishes.
A reputable funeral plan provider shouldn’t mind you asking:
- Are you FCA authorised?
- How is my money protected?
- Do I have FSCS protection?
- What exactly am I paying for?
- What happens if your company fails?
In fact, we’d encourage it, because at Funerals with Grace, we believe understanding how your plan and money are protected should be part of choosing a funeral plan, not something that’s hidden in the small print.
Lines open now.
