The FCA has today (2nd March 2021) launched the long awaited consultation on how it plans to regulate the pre-paid funeral plans sector.
The FCA’s proposals intend to ensure that:
- products meet the individual needs of consumers and will ban the sale of products which do not provide for funeral services in almost all circumstances on the individual’s death
- plans are sold fairly, including a ban on cold-calling to prevent consumers being pushed into taking out plans which may not be right for them
- the price of plans are fairly valued, with firms stopped from using additional fees to drive profits and a ban on commission payments to intermediaries
- consumers have access to the Financial Services Compensation Scheme and Financial Ombudsman Service from day one, should things go wrong.
The FCA have set out that they will be providing a range of help and guidance to assist firms in preparing applications and getting ready to be regulated by the FCA.
Firms will need to:
- apply directly to the FCA for authorisation from September 2021 or, if appropriate, submit notification to become an Appointed Representative
- apply as soon as possible after the application gateway opens in September 2021 – applications made after 1 November 2021 may incur a higher application fee
- ensure they meet our standards to be authorised and, once authorised, follow our rules
- pay an application fee and then annual fees, based on turnover
Those funeral plan providers that cannot meet the FCA’s standards, set out in the consultation paper, or those which are not authorised before July 2022, are expected to cease trading in relation to funeral plans in an orderly way. This should take place before FCA regulation takes effect. Carrying on regulated business without authorisation after Jul 2022 is a criminal offence.
The FCA is asking for feedback on the draft rules and is asking for responses by 13 April 2021.
You can read a copy of the consultation here.