To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of giving protection to funeral plan policy holders who have bought funeral plans from firms who might enter into administration before the change to the regulatory regime on 29 July 2022.
26 April 2022
In January 2021, the government legislated to bring all pre-paid funeral plan providers and intermediaries within the regulatory remit of the Financial Conduct Authority (FCA). This means that by 29 July 2022 all funeral plan providers must be authorised by the FCA.
Safe Hands Plans has recently gone into administration. I am aware that the current situation will be distressing for customers of Safe Hands and can assure you that the Treasury continues to monitor the implementation of regulation in this sector closely.
While the FCA does not yet regulate funeral plan providers, it is currently supporting the industry and administrators to see if a longer-term solution is possible for Safe Hands’ customers.
It is regrettable that bringing a previously unregulated sector into regulation – whatever form that may take – creates a possibility that some providers are not able to meet the threshold for authorisation. However, a well-regulated market should promote effective competition and drive better outcomes for consumers in the long-term.
Where a provider is unable to obtain FCA authorisation because of underlying issues, it is important to understand that this is not an issue created by bringing the sector into regulation. Rather, bringing the sector into regulation exposes these unsustainable business models and prevents these problems from getting worse and impacting more consumers.
The Government’s legislation has allowed for an 18-month transition period before the new regulatory regime comes fully into force on 29 July 2022. This transition period was intended to give existing providers sufficient time to prepare for the new regulatory requirements. The FCA’s guidance is clear that providers who are not seeking or not able to obtain authorisation should either transfer their existing plans to a provider which is seeking authorisation, or wind down in an orderly way before regulation starts.