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Insight: New FCA Proposal to Regulate Funeral Plans Sector

According to a consultation paper published by the Financial Conduct Authority (FCA) on 02 March 2021, there’s a new proposal for the regulation of the pre-paid funeral plans sector.

 

The proposed regulated activities will include – providers of funeral plan contracts and those entering into funeral plan contracts as a provider.

 

Why are these new regulations needed?

This new proposal comes in light of a 2018 Call for Evidence from the Treasury, which found ‘significant customer harm’ in the market. This included the mis-selling of products, poor disclosure and high upfront costs.

 

What changes might we see?

The FCA has proposed to implement regulations to see the following:

  • Fairly sold plans
  • Products that meet consumer needs
  • Products representing fair value
  • Improving governance standards and oversight
  • Ensuring services can be delivered
  • Backstops in place, should things go wrong
  • Other related proposals
  • Rules applied to contracts which were entered into before the regulation

 

Rules for Senior Individuals

  • All Senior Managers
  • All Certified Persons
  • All directors, whether executive or non-executive, who are not Senior Managers (these individuals would be subject to the individual Conduct Rules and SC4 – the Senior Manager Conduct Rule to ‘disclose appropriately any information of which the FCA or PRA would reasonably expect notice’)
  • All other employees (with exception of those listed at 8.76 in the FCA’s proposal publication)

 

When can firms apply?

If the consultation paper is not opposed to, the gateway for authorisation applications is expected to open in September 2021. Firms would then need to ensure they are authorised before the rules come into force next year.

 

 

‘From 29 July 2022 activities involving the provision and distribution of pre‑paid funeral plans will become fully subject to our regulation, and firms conducting these activities will need to be authorised by us.’

 

Resources:

To see the full FCA proposal, click here.

Watch our video to find out more about the SMCR.

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