SAIF Golden Charter

The guardian of consumers’ rights

As the UK funeral industry faces governmental inquiries and tightening legislation, the sector is undergoing its most severe scrutiny.

SAIF members are renowned for providing clients with valued and trusted advice, in their greatest time of need. Buying a funeral plan can be one of the most emotional purchases ever made and customers need to be sure that their money is safe, with just one chance to get it right.

The Funeral Planning Authority (FPA) is an impartial body that aims to protect customers by reviewing the approach and finances of providers who are registered with it. Its priority is the customer and ensuring that the purchased funeral can be delivered. But what do we know of its work?

Graeme McAusland has been Chief Executive of the FPA since 2014.

“The main question we ask is: ‘is the money being managed appropriately so that the funeral can be delivered?’” revealed Graeme. “We offer what I call a preventive regulatory approach, questioning the financial security and the arrangements for the funeral. FPA-registered firms have just emerged from arguably the biggest financial crisis the UK has ever seen and not one has failed. Basically, customers have got what they paid for.”

Graeme, a qualified actuary, has spent his working life in the life assurance industry and worked with companies from the Prudential to The Children’s Mutual. At the end of 2013, Graeme made the decision to move more into non-executive work and was then approached by the FPA.

“I hadn’t set out to do this, and I had a vague notion of what funeral planning was. I came into this role with no connection to the industry, no preconception on whether the products, providers or regulation were good or bad.

“A key aspect of our role is to ask, ‘how safe is the money?’ My professional training is incredibly useful in looking at some of the resulting issues. I am also used to the world of financial regulation and dealing with the Financial Ombudsman Service which I think gives me some useful insights on how we should be interacting with providers and customers.”

To gain FPA registration, providers have to apply and then pass independent scrutiny on how they work and how they protect customers’ interests in line with the FPA’s Rules and Code of Practice. Most providers in the UK market are registered with the FPA, but a number are not.

Responsibility for ensuring those non-registered providers are complying with the very basic legislative requirements lies with the Financial Conduct Authority (FCA). The FPA and FCA work closely together in trying to ensure that across the market those basic requirements are being met.

The benefits of registration are indisputable, as Graeme explained: “If I was a funeral director, I would only want to work with a company that was FPA-registered as registration gives assurance that there has been independent scrutiny. Registration involves an independent group of people looking and checking that plans are being managed appropriately. We view financial statements and literature annually, and we check everything to make sure companies are putting out the right material.

“For non-FPA registered firms, the FPA suggests that anyone, customer or funeral director, thinking of working with them should at the very least do their own due diligence to satisfy themselves that they are not exposing themselves or their business to undue risk.

“Funeral directors are highly protective of their reputation. Businesses are built around reputation and why would you risk that?”

Graeme added: “Our rules are common sense, about doing the right thing and protecting customers. There are not a massive set of difficult rules that are expensive to comply with. The cost of being registered with us is relatively small so why, as a provider, would you not register and give that bit of extra scrutiny?”

Set up in 2002 by the funeral plan industry, the FPA was a response to a concern that the basic legislation was not sufficiently robust and some additional due diligence and controls on providers was necessary.

The Board currently consists of Chairman Steve Winfield, who has a financial services background and also has experience of other self-regulatory bodies; Ronnie Wayte, Director of Golden Charter; Alison Close, Commercial Director at Co-operative Funeralcare; Michael McCollum, Chief Executive of Dignity; Barry Floyd, Managing Director of Golden Leaves; and Graeme.

“The FPA is a self-regulatory body but absolutely fundamental to how it operates is that, without exception, all registration and compliance matters have nothing to do with the Board,” Graeme explained. “Our Compliance Committee is independent. A barrister chairs the committee and it makes the decisions. If you apply to be registered with the FPA and are doing things in line with our rules then there is nothing to worry about.

If you are not then the committee will ask you to change to be in line with the rules. If you do, you will be registered – if you don’t, then you won’t. The committee has no agenda other than making sure providers comply with the FPA Rules and Code of Practice.”

As an article in SAIFInsight revealed in May (issue 176), MPs had called for an inquiry into the funeral profession.

In its report on support for the bereaved, the Work and Pensions Select Committee said that more vulnerable bereaved people did not appear to be well served by the way in which funerals currently operate.

The FPA works hard to ensure that all customers are treated fairly and that funeral companies supply accurate information. A key part of this is helping with customer complaints.

Graeme added: “For the size of the market, the volume of complaints is very low. One problem I do have are anecdotal reports of unresolved complaints or poor market behaviour. If there are a lot of serious, unresolved complaints then I would like to hear about them. If a registered provider is behaving inappropriately then we would like to hear about it.

“We will follow a complaint through to resolution and if that means getting plan providers to change how they do things, then we will. If SAIF members see things that are not right, then let us know.”

Customers can contact the FPA directly and the FPA website is currently being revamped to make this easier.

Most complaint cases are relatively straightforward, with the client offering their version of the events followed by the FPA checking with the provider for their side of the story. The FPA will then try to help resolve matters. If that is not possible and the customer remains unhappy, then it can use the FPA’s Independent Dispute Resolution Service (IDRS).

This process aims to find a solution or, at the very least, provide an answer to explain the situation through a two-stage conciliation and, if necessary, arbitration.

The FPA complaints work is beneath the surface and not publicised, but objective intervention does result in customers being helped to resolve their problems.

According to Graeme it is a ‘common sense approach for customers’.

“We get complaints referred to us when the customer and provider can’t agree. We are dealing with largely older people, and sometimes it is quite a large sum of money. I think providers need to be able to explain why they have treated customers in a specific way. We are robust in making businesses play fairly with customers. ”

With the funeral plan market going from strength to strength – with FPA registered plan sales rising from 46,340 in 2002 to 183,500 in 2015 – it is certainly a booming business but one that must be cautious of its approach to selling.

Graeme explained: “I think there is a chance for funeral plans to be a force for good, to encourage and educate people to think about how they will pay for a funeral. Everyone is going to die, it is just a question of when, and at that time there is going to be a cost. The danger is that this potential force for good is knocked off course by poor selling practices and the FPA’s future activity will be focused on ensuring that selling is being done properly.”

The fundamental message from Graeme and the FPA is that registration adds value. For customers, it offers that extra peace of mind that the funeral they have purchased will happen when needed. For funeral directors, it offers reassurance that companies who could impact your reputation and business have had independent scrutiny.

“To me there seems to very little rationale for a provider not to seek registration with the FPA,” said Graeme.