Pre-paid funeral plans: FCA rules, refunds and what to check
Published · 5 min read · Figures checked . UK rules and rates change, so check the official sources below before you act.
Pre-paid funeral plans have been regulated by the Financial Conduct Authority since 29 July 2022. This guide explains how the rules, the 30 day refund, FSCS protection and the Financial Ombudsman work, and how to check a provider.
What a pre-paid funeral plan is
A pre-paid funeral plan lets you arrange and pay for a funeral in advance, usually at a price fixed when you buy. You can buy one for yourself or for someone else, such as a partner. The money is paid either as a lump sum or in instalments, and the provider promises to arrange the funeral when the time comes. The Financial Ombudsman Service describes a plan as a way of pre-arranging and pre-paying for a funeral, generally at a fixed cost.
Until July 2022 most plans were not regulated by the FCA, the financial services regulator. Since 29 July 2022, a funeral plan provider must be authorised by the FCA, and it needs permission for the right activities: entering into a funeral plan contract, and administering and processing claims on an existing plan. The FCA reported that on that first day 26 providers were authorised, holding about 1.6 million plans, around 87% of the market. This guide applies to plans sold in the UK by FCA-authorised providers. It does not cover life insurance policies, savings set aside for a funeral, or government help with costs.
The main protections
The FCA's rules, which took effect on 29 July 2022, include a ban on cold calling and a ban on commission payments to intermediaries such as funeral directors, so that products represent fair value. Plans must also meet new standards on advertising. A further rule says a plan must deliver the funeral unless the customer dies within two years of taking it out; in that case a full refund is offered. The rules also allow plans to be moved to a new provider on the same terms as the original contract if a provider gets into difficulty.
On cancelling, the FCA's published summary says customers must receive a full refund if they cancel within 30 days of purchase, and after that pay only a reasonable charge. The summary does not define that charge, so the amount, if any, is something to read in the plan's own terms and ask about before buying.
- Cancel within 30 days of buying: full refund.
- Cancel after 30 days: only a reasonable charge, which the plan terms should explain.
- Death within two years of taking out the plan: the funeral may not be delivered, but a full refund is offered.
- No cold calling, and no commission to intermediaries such as funeral directors.
If a provider fails: FSCS protection
The Financial Services Compensation Scheme (FSCS) is the UK's compensation scheme for financial firms that fail. For funeral plans it applies if the provider went out of business on or after 29 July 2022, including for plans bought before that date, and the provider must be FCA-regulated. FSCS says it protects claims up to £85,000 per eligible person, per firm. Where a provider fails, FSCS will try to offer a like-for-like replacement plan from a new regulated provider. If that is declined or cannot be arranged, compensation is based on what the same plan would cost to buy on today's market.
There are limits. FSCS does not protect plans from firms that are not authorised, and it does not deal with complaints about a provider that is still trading, which can go to the Financial Ombudsman Service instead. If a plan holder dies after a provider fails, help with the funeral is not a guaranteed payout: FSCS says it may be able to help only if it has not yet secured a replacement plan or paid compensation, and the insolvency practitioner cannot arrange the funeral. The FCA also warns that if a firm is not authorised you may have no access to FSCS or the Ombudsman, and so are unlikely to get your money back if it fails.
How to check a provider
The FCA suggests using its Firm Checker. Search the provider's name, choose funeral plan, confirm the firm is authorised, and read the section headed what this firm can do. If the firm is an appointed representative, which means it sells on behalf of another authorised firm, check that firm's principal as well. If a provider no longer appears, it has either transferred its plans to an authorised provider or wound down. Your paperwork, or the firm that sold you the plan, should show who currently holds it, and the National Association of Funeral Plan Providers runs a tracing service for plans held by its members.
A worked example
These figures are illustrative only. Suppose someone buys a plan for £3,900 as a single payment. If they cancel on day 20, that is inside the 30 days, so the full £3,900 is refunded. If they cancel on day 45, the refund depends on the plan's reasonable charge, which is not a set figure. Now suppose the same plan can be paid over 36 monthly instalments of £110. The total is 36 x £110 = £3,960, which is £60 more than the lump sum (£3,960 minus £3,900). Comparing the total across payment options is simple arithmetic, and it can be worth doing before choosing one.
Complaints and where to get free help
The Financial Ombudsman Service can look at complaints about the sale, administration, redemption and delivery of a plan from businesses regulated by the FCA, for events after 29 July 2022. Examples include unclear key terms, a price thought to be too high, being asked for extra payments for services outside the plan, and how a cancellation or refund was handled. Earlier events can be considered if the provider belonged to the Funeral Planning Authority at the time. You complain to the company first; the Ombudsman can step in if there is no final response within eight weeks or you are unhappy with it. The service is free, and an executor or next of kin can complain on behalf of a plan holder. Many people also find free general guidance from MoneyHelper and Citizens Advice.
Check before you act
Rules, limits and rates can change, so it can be worth confirming the details on the official pages linked below before relying on this guide. It is general information, not personal advice.
Sources
For information only. See our disclaimer and editorial standards. Spotted an error? Tell us.
