Pre-paid funeral plans in the UK — what changed after FCA regulation
Quick answer: A pre-paid funeral plan lets you pay (in full or by instalments) for the main costs of your funeral at today's prices.
A pre-paid funeral plan lets you pay (in full or by instalments) for the main costs of your funeral at today's prices. Since 29 July 2022 the sector has been regulated by the FCA, with much tighter rules on cold-calling, redress and what must be included.
Last reviewed:
Primary source: https://www.fca.org.uk/consumers/funeral-plans
What the FCA rules actually changed
Pre-2022 the sector was self-regulated by the Funeral Planning Authority. After widespread concerns about high commission, misleading sales and inadequate consumer protection, HM Treasury brought the sector inside the FCA's perimeter.
FCA-authorised firms must hold customer money in either a ring-fenced trust or a whole-of-life insurance policy, treat customers fairly under the Consumer Duty, and provide a clear pre-sale fact sheet.
FSCS cover means that, if the provider fails, the plan can usually be delivered by an alternative funeral director or refunded. This protection did not exist before regulation.
What's typically covered (and not)
Covered: the funeral director's professional fees, collection, care of the deceased, a coffin, hearse and limousine, viewing of the deceased, and (in most plans) the cremation fee.
Often only partially covered — 'third-party disbursements' such as the burial plot, minister/celebrant, doctor's fees for cremation paperwork (where still charged), and the wake. Cheaper plans include a fixed 'allowance' that may be less than the actual fee at the time of death.
Almost never covered: memorial stones, headstones, flowers beyond a small allowance, newspaper notices, and reception costs.
Alternatives — when a plan is and isn't right
A ring-fenced savings account or a cash ISA in your name can also fund a funeral, gives you flexibility, and remains your asset (relevant for benefits and care-fees means-testing in some circumstances).
Over-50s life insurance pays a fixed lump sum on death. The cumulative premiums can exceed the payout if you live long enough, but it gives certainty of a cash amount rather than a specific service.
A plan is most useful where you want a particular funeral director, you want to lock in current professional fees, and the trust or insurance arrangement is transparent. Read the plan summary, check the FCA register, and compare two or three providers before committing.
Common questions
- Are pre-paid funeral plans regulated?
- Yes, by the FCA since 29 July 2022. Before signing, check the provider is on the FCA register. Plans bought before 2022 should have been transferred to an authorised provider or refunded; if you have a pre-2022 plan you can't trace, contact the FSCS.
- What happens if the provider goes bust?
- FSCS protection covers FCA-authorised plans where the failure occurs on or after 1 November 2022. The FSCS aims to have an alternative funeral director deliver the plan, or refund the holder if delivery isn't possible.
- Will a plan affect means-tested benefits or care-fee assessments?
- A genuine pre-paid funeral plan is usually disregarded as an asset for both means-tested benefits and local authority care-fee assessments. Cash savings earmarked 'for a funeral' but not actually held in a plan are not automatically disregarded.