Funeral plans: government urged to raise funds for victims of failed providers


After 46,000 people suffered losses as a result of a recent company collapse, the government has been asked to set up an emergency fund to help victims of failed funeral companies.

In March, Safe Hands took a hit for customers who used it to pay for funerals.

Campaigners warned that other firms could also fail, leaving customers in “funeral poverty.”

Restructuring firm FRP, appointed to run Safe Hands, says the company doesn’t have enough money in its coffers to meet its commitments.

Over the next six months, Dignity, one of the UK’s largest contractors, has agreed to hold a “non-profit” funeral for Safe Hands customers and will offer plans to surviving customers.

However, many are ready to lose money as a result of the collapse.

The Safe Hands failure comes at a critical time for the funeral sales industry, which will face tough new rules from July 29, when the Financial Conduct Authority (FCA) enters its mandate.

New protections for consumers include banning certain sales tactics, such as cold calling. Customers will also qualify for the Financial Services Compensation Plan, so their money will be protected if plan providers fail.

To continue to operate, undertakers must pass rigorous tests set by the FCA to obtain permits. Fears are that the change will expose weak players in an industry that has been criticized for aggressive selling tactics and low value.

Campaigners launched a petition calling on the government to create a fund for victims of failed companies. They fear more people will find themselves in the same situation as Safe Hands customers, and are urging the government to “protect victims from funeral poverty.” If the petition collects 10,000 signatures, the government will have to respond.

The FCA website displays the status of each company’s application for authorization. Of the 66 listed funeral plan firms, 12 had their applications rejected or withdrawn, another 15 were intent on transferring their plans to another provider, and seven had never applied.

An FCA spokesperson said those purchasing a prepaid funeral plan from Safe Hands would “understandably be concerned”.

“The government changed the law to allow us to regulate prepaid funeral plans from the end of July 2022. Until then, companies like Safe Hands are not subject to scrutiny and our powers are limited,” they say.

“We are currently reviewing firms’ applications to ensure they meet the standards that need to be regulated, and we’ve put in place rules that firms must comply with starting July 29, including protecting consumers if they fail.”

The collapse of Safe Hands left a trail of agony, with a call center set up by FRP flooded with 15,000 calls from anxious planners.

Among them are Susan and John Ogilvie from Essex, who have spent £8,000 on two funeral plans. Susan says they used their savings to buy the plans, so “no one was worried”, but now they’re facing losing most of their money.

“A few years ago my sister’s husband died and she had no money,” says Susan. “The mortician asked for £2,000 upfront and he didn’t have it. Fortunately we’re not in that situation, but you never know. I didn’t want anyone to go to the funeral director and say, ‘I don’t have money for this.'”

FRP is trying to hit the bottom of Safe Hands’ cash, but its latest update paints a grim picture.

FRP says the private equity-backed company uses two fund managers to deposit clients’ money, one of which is going into liquidation. It has around £4 million in cash and tradable shares in UK listed companies. However, a significant number have entered high-risk investments, often in offshore jurisdictions.

Dignity will require additional contributions from customers who choose to transfer their plans. It says it will price these new plans “as cheaply as possible”, with customers potentially spreading the cost over five years.

“What happened in Safe Hands is embarrassing and highlights why discipline and regulation security is necessary and overdue,” says Mike Hilliar, Dignity’s director of funeral planning. “We are working with administrators to ensure that grieving families do not go without a funeral; however, this is only a short-term solution. In the longer term, we are working on a solution where funeral plan customers can choose to upgrade to a Dignity funeral plan.”

Fairer Finance’s managing director, James Daley, says it would be right for the Treasury to compensate customers out of pocket as a result of the new regulation in the industry.

“My view has always been that the Treasury went after this because we knew regulation would crystallize losses for a number of people who had plans as soon as those rules kicked in and bad actors were out of the market,” Daley said. says.

“Safe Hands will always be the largest company that looks likely to fail, but there are still many small and medium-sized companies whose status is uncertain.”

A spokesperson for HM Treasury said that regulation of prepaid funeral plans would protect consumers from bad practices in the industry.

They add: “We recently passed secondary legislation to make it easier for regulated funeral plan providers to acquire clients of emerging providers. This will protect consumers – especially during the transition to regulation – by enabling more funeral plan owners to take advantage of continued plan coverage.”