CMA consults on market investigation

The Competition & Markets Authority (CMA) published its interim report into the at-need funeral market on 29 November, recognising that, on average, independent funeral directors are more affordable than the large providers.

While this news should bring fami l ies to the independent sector, the CMA also found evidence of widespread consumer vulnerability in the market, a lack of transparency, ineffective self-regulation, and low levels of understanding from families on how to assess standards.

In particular, the CMA drew attention to large price differences within local markets, noting that customers could save over £1,000 by looking at a range of choices in their local area. The competitions watchdog concluded that bereaved consumers do not shop around for funerals in the same way they might with similarly expensive purchases because of a lack of experience in the funeral market, and the emotionally exposed, time-pressured nature of the purchase.

Based on these findings, the CMA is now consulting on proposals to conduct a full investigation of the at-need funeral sector, with CMA Chief Executive, Andrea Coscelli, commenting: “People mourning the loss of a loved one are extremely vulnerable and at risk of being exploited. We need to make sure they are protected at such an emotional time, and we’re very concerned about the substantial increases in funeral prices over the past decade.

“We now feel that the full powers of a market investigation are required to address the issues we have found. We also want to hear from people who have experienced poor practices in the sector, so that we can take any action needed to fix these problems.”

Reactions to the announcement

The CMA’s announcement was welcomed by Frank Field MP, Chair of the House of Commons Work and Pensions Committee, who said: “The committee reported on how many poorer people are ripped off by funeral directors. I’m glad the CMA has recognised the need to take an in-depth look at this market, to put an end to the exploitation of bereaved people.”

Consumer rights body Citizens Advice also greeted the CMA’s decision as a positive move. Chief Executive Gillian Guy said: “People organising a funeral are being exploited at one of the most emotional and stressful times in their lives. Huge upfront costs and unclear fees are far too common, with thousands of pounds of ‘extras’ regularly added to bills.”

Potential remedies

The legal powers to undertake a market investigation are contained in the Enterprise Act 2002. Formally, market investigations consider whether there are features of a market that have an adverse effect on competition. If these adverse effects are established the CMA has the power to impose its own remedies, but it can also make recommendations to the Government when legislation might be required.

Possible remedies, as outlined in the interim report, include direct action by the CMA to enforce a standardised format for publishing prices and a statutory code of conduct. The competitions watchdog could also recommend to the Government that it legislates for a new regulatory body, and for the introduction of an inspection and licensing regime. Given that the CMA considers almost all consumers in the at-need market to be ‘extremely vulnerable’, the watchdog could also recommend actions that encourage consumers to engage with the funeral profession at an earlier stage, before the point of need.

The investigation process

If, as expected, the CMA decides to go ahead with a full market investigation, a group drawn from the CMA’s panel of experts will lead the probe over an 18-month period. Near the start of the process, the group will publish an ‘early issues statement’, setting out the scope of the investigation and specific issues they wish to explore.

The group will then host a series of evidence gathering sessions and site visits across the UK, with funeral directors, consumer rights groups, charities and other interested parties invited to take part. After 12 months, the panel will publish its provisional findings, giving interested parties a final chance to comment, before issuing the final report with recommended market remedies.

Next steps

The CMA is currently consulting on the draft terms of reference for the proposed market investigation. The watchdog is expected to formally launch its investigation – known as ‘making reference’ – on 31 May 2019, the date on which it is due to publish its final market study report. With the 2002 Enterprise Act permitting the CMA 18 months to conduct an investigation, the final report can be expected no later than 30 November 2020.

Commenting on the launch of the consultation, Terry Tennens, Chief Executive of SAIF, said: “As a professional body, SAIF has been calling for tougher market regulation for several years, so we welcome the CMA’s findings and look forward to participating fully in the subsequent investigation.

“With the CMA interim report indicating that independent funeral directors are more affordable compared to the large providers – which has been consistently true over the years – SAIF members should be proud of the value they offer families and the quality of service they offer, in caring for the deceased and the bereaved.

“But we must also listen carefully to the findings of the CMA and act accordingly. Independents must now come together to make sure that we lead the funeral industry in transparency, value for money, quality of service and standards of care, in all that we do, all of the time. This is our challenge and we at SAIF will excel in the task of strong consumer protection and members’ service standards.”

Gordon Swan, Golden Charter Director of Communications, added: “Golden Charter welcomes the CMA findings and stands ready to embrace proposals that will give additional protection and choice to consumers.

“With widespread consumer vulnerability identified at the point of need, we will continue to encourage families to have early engagement with the funeral market, before the point of need, and to consider a range of options.

“Working closely with SAIF and our ownership association, SAIFCharter, Golden Charter will play a full part in the consultation process and will continue to engage with the CMA in the interest of the independent sector and the communities they serve.”

Alongside the CMA’s study into the at-need funeral market, the Treasury has been conducting a review of the pre-paid market and is expected to publish its findings in early 2019.

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