Pre-paid funeral plans are regulated by the FCA. Therefore, if you wish to sell prepaid funeral plans you will need to become FCA authorised.
What are the key regulatory requirements
- Funeral plans need to represent fair value to the customer. They need to be priced fairly and you need to demonstrate how you have achieved this.
- Funeral plans need to have an adequate trust or insurance for providing the funeral service and surpluses can only be withdrawn from a trust if it reaches a solvency above 110%.
- Key product information needs to be provided to customers which includes a Funeral Plan Summary, a Nominated Representative document for the next of kin and an ongoing annual statement.
- Firms need to provide a funeral plan either on an advised basis or a non-advised basis and meet the associated standards set by the FCA.
- Payment of commission to intermediaries such as funeral directors will be banned.
- Customers have the right to complain to the Financial Ombudsman Service. Firms will need to deal with complaints within set timeframes and in accordance with the FCA DISP rules.
Key Considerations for your FCA application
Your FCA application needs to pay particular attention to:
- Business plan - This is a key critical document and needs to articulate your business strategy and in particular how you will run and manage your business. The plan also needs to show that you are aware of the regulatory risks relating to your business and explain how you would be able to manage them.
- Capital resources - All funeral plan providers need to have adequate capital resources set aside. The exact amount depends on the type of funeral plans you provide (insurance v trust based).
- Complaints handling processes and procedure - As part of your application you will need to provide the FCA with copies of your complaint handling procedures, which need to be aligned with the FCA's DISP rules. They need to show you that you know how to identify and deal with customer complaints fairly.
- Supporting documents - You will need to provide a range of internal and customer facing documents. These include a Wind-Down Plan, Compliance Monitoring Procedures and Financial Projections.
How we can help you
We are already working with several other funeral planning providers and have completed applications on their behalf. We can:
- Complete your application on your behalf.
- Provide you with the templates and documents required to support your application such as the Wind Down Plan, a Funeral Plan Summary, a Nominated Representative Document, Compliance Monitoring Programme, Vulnerable Customers Policy etc.
- Review your application for you prior to submission. This will help to avoid delays and unnecessary questions after you have submitted your application.
- Help you with any technical queries you may have e.g., solvency requirements, Approved Persons process, PROD requirements, interpreting fair value etc.