More news about prepaid funerals
Government issues a Consultation Paper on protecting consumers
NfCG has done much in recent times to alert Government to the possible lack of protection to which purchasers of prepaid funerals may be exposed, in that some of the financial arrangements, seem to be outside the supervisory regime. This Government has lost little time in taking a look at the situation and the result is a Consultation Paper which may suggest ways to increase consumer protection. Get a copy and see for yourself.
The Economic Secretary to the Treasury, Ms Patricia Hewitt, published the Consultation Paper on the regulation of the prepaid funerals industry on January 14th. This follows Ms Hewitt’s announcement, on July 29th last, that prepaid funerals will be included in the scope of regulation under the Financial Services and Markets Bill. The announcement also indicated that the Government is looking at ways of excluding arrangements that provide sufficient consumer protection from direct regulation by the Financial Services Authority (FSA).
The Consultation Paper sets out the Government’s plans for providing a proper level of protection for consumers who purchase their funerals in advance. It explores how certain prepaid funeral plans might offer sufficient protection to their purchasers and, therefore, need not be regulated under the Bill. The Paper is concerned only with the financial aspect of prepaid funeral plans (i.e. protecting consumers’ prepayments and ensuring that these will be sufficient to pay for the funeral when the time comes) and not with other issues such as the conduct of the funeral.
The paper seeks views on two possible exemptions to regulations: Firstly, if the plan is backed by a Life Insurance policy; this may be a whole of life, or an investment linked policy. Insurance companies are prudentially regulated and both of these types of policies are subject to FSA conduct of business rules.
Secondly, the paper also discusses prepaid funeral plans based on trusts, and sets out some criteria that trusts would need to meet in order to achieve exemption. It makes it clear that some additional backup is needed in case the trust fund fails for any reason.
Readers are invited to comment, see below.
This article was largely prepared by the Consumer Affairs Directorate of the Department of Trade and Industry and the text agreed with Treasury colleagues.
What do you think?
Readers are invited to comment on the proposals and, in particular; to answer a series. of questions about the criteria for consumer protection set out in the paper, and to give details of arrangements for prepaid funerals that may provide sufficient protection for consumers so these can be considered for exemption.
While the Paper is mainly directed at the providers of prepaid funerals, the Treasury would welcome comments from others, including consumers and their representatives. If you do wish to make comments and would like us to consolidate them with others, send them to Stuart Coverley (01752 662972) who will pass them on to the Treasury. Before you can comment you will need a copy of the paper "Regulation of the Prepaid Funeral Industry" which maybe obtained from:
Mrs Raminder Sandhu,
Financial Services Team,
Room 112G,
HM Treasury,
Parliament Street,
London. SWlP 3AG.
Tel: 0171 270 5570 Fax: 0171 270 4694
E-mail: ramindersandhu@hmtreasury.gov.uk
The paper is also on the Internet through the Treasury’s home page: http://www.hmtreasury.gov.uk Responses to the consultation paper should be sent to Mrs Sandhu at the Treasury by 30th April 1999.
A Letter from Professor Geoffrey Woodroffe - Funerals Ombudsman
I read with interest the recent article in Consumer News, issue 194, Dec/Jan 99, entitled Rest in Peace, and which deals with various aspects of the funerals profession.
I was concerned by some references made to the Funeral Ombudsman Scheme (FOS). It was mentioned that NfCG has been concerned about aspects of the funeral industry and that several members are involved in running ‘Funeral Ombudsman Schemes’. Indeed I was further concerned to read that NfCG believes "there should be one Ombudsman to whom discontented consumers can appeal".
The involvement of NfCG members in running schemes is true in that two Vice-Presidents are involved with FOS (one is chairman of my Council, the other a Council member). However, there is only one Funeral Ombudsman Scheme, (your use of the plural "Schemes" gives a false impression) and only one Ombudsman. The Funeral Ombudsman Scheme was set up in 1994 and I am the first and only UK Funeral Ombudsman. As to Codes of Practice, mine covers two-thirds of funerals conducted in the UK. Clause 4 deals with your very point of price lists.
• Apologies to Professor Woodroffe - certainly NfCG
supports the principle that all
funerals conducted in the UK should be covered by the FOS Code of Practice - Ed
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