The idea of buying our funeral in advance is a popular concept in the UK. Many feel that it allows them to plan what they want when the time comes and means they can remove the worry for their friends and family.
Around 160,000 new plans are taken out each year and more than 1.5million are currently held. As a result, the Financial Conduct Authority (FCA) has set out its intentions to regulate the sale and set up of such plans.
The cost of a funeral has been rising steadily over the last 20 years with an average burial now £5,033 and typical cremations costing £3,885. The purchase of a pre-paid funeral also means that the cost can be fixed at today’s prices.
From next summer, advice on funeral plans will require investment permissions. In a 309-page policy statement, the regulator laid out its final rules including a ban on commission payments to prevent any conflicts of interest or poor outcomes. Instead, advisers will only be able to be paid via direct fees from clients.
The ban faced criticism from some quarters who were concerned that the stricter rules would see many firms leave the market and that some clients could not afford to pay a fee for the firms advising or arranging services. But the FCA said, "None of the respondents put forward any reasons why charging an advice or arrangement fee, would not be viable. It pointed out that commission is paid by the consumer but included in the headline price rather than being agreed and paid separately.”