FPA: If it looks too good to be true, it probably is
The Funeral Planning Authority (FPA) has warned Independents to be cautious about planning products being offered by unregulated providers, saying some may be making unrealistic claims.
Graeme McAusland, the FPA’s CEO, told SAIFInsight: “At the FPA we are very conscious that the funeral director community has been through a very challenging period. At the same time, the industry is heading towards the intended implementation of FCA regulation where funeral plan providers will have to be authorised by the FCA.
There will be a transition period to this authorisation and that presents potential opportunities for less scrupulous providers to take advantage to the detriment of customers and funeral directors’ reputations.
“We are particularly concerned about product offerings from providers that look too good to be true. We would argue that the old adage of ‘if it looks too good to be true, it probably is’ applies here, and funeral directors should ensure that the current challenging times don’t lead to anyone inadvertently falling for the latest exciting opportunity.
“If a new product or provider makes an offering that looks great then challenge how it works and do your own due diligence on the provider – Companies House and internet searches make this relatively easy. You should ask, for example, how the structure works, how money is being managed, how guarantees are being funded and what the underlying assumptions are that need to be borne out to make the plan work.
“If, for example, to make the product work it needs a return in excess of 10% per annum for 10 or more years with limited chance of a fall in values, then most financial experts would frankly describe that as not the soundest basis on which to base a product – or in other words, nonsense. This is particularly true at a time when interest rates are effectively zero or negative.
“We have said before that customers and funeral directors should only work with FPA registered providers and that message is as important as it has ever been in these challenging times.”
The FPA lists registered plan providers here.
Tags: CEO, FCA, Financial Conduct Authority, FPA, Funeral Planning Authority, Graeme McAusland, regulation, Trust