The pre-paid funeral plan market is coming under the Financial Conduct Authority (FCA) regulation from 29th July 2022.

The FCA consulted on draft rules in Q1 2021 and published final rules in July 2021 with a short follow up policy statement on the 5th November 2021 including the provisions for the wind down of a provider.

The rules are detailed (over seven hundred pages) complex and firms should not underestimate the effort necessary to submit a full application to the FCA nor, if they decide they do not want to apply, the work involved in resolving their existing portfolio, transferring to another provider and ensuring that customers remain fully informed of the intentions of the firm. The FCA expects that if the firm cannot become authorised or transfer the portfolio in a legally compliant manner, it should embark on an orderly wind down of its portfolio and if necessary refund the customers the monies which they have paid for their funeral plan contract.

The FCA opened its authorisation application window on the 1st September 2021 with an initial deadline of 29th October 2021. The FCA is tracking progress of authorisation applications on its website and as at 2nd November around thirty out of nearly seventy providers had submitted an application. 

On 12th November the FCA sent out a Dear CEO letter to firms reminding of the need to either apply for authorisation or make alternative arrangements for their existing customers.

The team at AG has been actively involved in this market for the last year, supporting several firms with authorisation applications, looking at the detailed rules, establishing new corporate entities for the go-forward provision of funeral plans and looking at alternative structures such as the applicability of the appointed representative regime. We have significant depth of understanding of the rules across both our financial regulation and corporate restructuring teams.