Funeral plan regulation brings customer confidence – but FCA has more to do

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FCA regulation of the funeral plan market has enhanced a financial product that already met the customer need better than any other. FSJ asked Simon Cox – founder of independent research and consultancy business Funeral Solution Expert to outline the headlines from their recently launched study of the funeral plan market in a newly regulated sector.

There is no doubt that the funeral plan sector has experienced a seismic shock from being regulatory ready for July 2022. Funeral Solution Expert (FSE) have undertaken a comprehensive review of the market bringing together expert analysis of both traditional and direct cremation funeral plans, infused with findings from both independent funeral directors and a nationally representative sample of 1,500 UK adults.

Our review leads us to five headline conclusions:

1. The sector is still recovering from the shockwave of regulation.
2. Funeral plan providers are still working to establish their propositions and service.
3. Newly regulated entrants into the market are riding on the crest of the wave for direct cremation.
4. Consumer needs are not being fully met by more traditional funeral plans – direct cremation plans currently having greater clarity and guarantees.
5. FCA initial objectives have largely been met – but more can be done to provide better customer outcomes – and there are some areas they are likely to look closer at.

We explore a few aspects as follows:

Our findings show that at a headline level consumers feel that funeral plans are now safer to buy. Two thirds (66%) of consumers saying they are more confident now the FCA regulate the sector. A third (31%) say they think it makes no difference, with just 3% feeling less confident.

Consumers feel that funeral plans are now safer to buy

This confidence echoes the findings from our research in Autumn 2022 which suggested independent funeral directors felt FCA’s entry to the market had rid the sector of the ‘cowboys’ and would be a safer market for consumers.

We explored with consumers how their preference for funeral plan solutions differ by generational cohort providing more evidence as to how quickly direct cremation is growing in popularity and at the expense of traditional funeral sales. Essentially the funeral plan market has split into two (direct cremation and traditional).

There are reasons underpinning the rapid growth of direct cremation, other than the obvious cost differential and changing attitudes to religion and ‘Victoriana’ funerals. Basic attributes included in most direct cremation funeral plans are now less prevalent in traditional plans which only helps to accelerate the erosion of traditional funeral plan sales.

Given that a funeral plan sale is driven by consumer ‘peace of mind’ and ‘not wanting to be a financial or emotional burden’ it is counter-intuitive that direct cremation funeral plans are offering far more in the way of guarantees and no more to pay when the time comes. Albeit there are aspects of transparency of extra costs and logistics (location of care of the deceased and distance the deceased will travel) with direct cremation plans, which our insight shows consumers are concerned about.

Exploring all aspects of current funeral plan offerings, we tested what is most important in a funeral plan (traditional and direct cremation), how consumers feel about certain features, costs and clauses and to what extent they feel these are fair.

It is this insight together with our review of all national plan providers’ propositions which leads us to believe that the FCA have more work to do to meet their original stated objectives and to ensure consumers needs are fully met.

The FCA have more work to do to meet their original stated objectives and to ensure consumers needs are fully met

We fully expect that with the imminent introduction of Consumer Duty rules, the FCA are likely to probe further or seek improvement – for example, for firms to understand potential issues of customer detriment and show how they plan to tackle them.

We outline one of these issues as follows:

One aspect of funeral plans FCA wanted to tackle was a family having ‘no more to pay’ when the time comes for the funeral plan to be used. As outlined previously, our insight shows how important this is to people buying plans and yet there is currently significant risk of customer detriment in relation to the issue of funeral plans that start ‘in deficit’ i.e. the initial contribution made by providers with ‘non-guaranteed’ plans not being sufficient from the outset to cover third party costs and where regional costs differ enormously, or the routine exclusion of doctors’ fees in most traditional cremation plans.

In summary – FCA regulation was a significant milestone and achievement for all funeral plan providers, but there is more to do to make the sector even safer for consumers.

Funeral Solution Expert’s full funeral plan market review and insight is available to purchase by visiting