Funeral Plan Industry

Debate between John Glen and Kevan Jones

Thursday 26th May 2022 Westminster Hall

[John Glen]

Going forward, people either are regulated—those who are going on the journey into regulation by the end of July go under FCA regulation, and it will be keeping an eye on their selling practices—or become an appointed representative of a bigger, regulated firm, which keeps an eye on them, and then the FCA keeps an eye on it. Many firms, most firms—I think it is in the order of 67 firms—are going through the journey into regulation. There will be smaller firms that decide not to go on that regulatory journey, and either they will become authorised under the appointed representative regime or they will wind down, and return the funds to their customers.

Those are the two options. The FCA is working with the industry to smooth that journey. The House passed a statutory instrument to ease that process of transition. But those are the options available. Of course, we are midway through that journey, but what this afternoon’s debate has shown is the imperative of the industry working to sort out some of the issues that have been laid bare by the Safe Hands experience. I think Safe Hands is an exception, but it is a pretty awful experience for those customers. My belief is that this process of regulation will give clarity to the situation, going forward, in terms of who is regulated, how they are regulated and what being under regulation, either as an appointed representative or directly from the FCA, means. The FCA will be responsible for communicating that.

[Mr Kevan Jones]

I thank the Minister for his explanation. My fear and, I think, that of the hon. Member for Telford (Lucy Allan) is that there may well be other companies like Safe Hands out there that will not go down either of those routes, so I am interested to know what the timescale will be on that. In relation to Safe Hands, he talked about the administrators. What powers does the FCA have if it finds, in those smaller companies, clear scams? I would use the word “scams”, because that is what I think Safe Hands clearly was. What powers does the FCA have then to force the closure of those schemes?

[John Glen]

As I said, it is difficult to be precise in all circumstances because every situation is different. The purpose of giving the FCA that authority is that it has the powers to fine, regulate and insist on certain levels of transparency. Ultimately, if firms that go into regulation do not align with those expectations, the FCA has the power to wind down those firms—in extremis. At this point we are at the start of the journey. The conversations I have had with Dignity—

[Mr Jones]

Will the Minister give way?

[John Glen]

I will certainly give way to the right hon. Gentleman in a moment. Dignity has set up processes to ensure that they continue to comply with those regulations. Those firms that do not choose to be regulated, or do not choose to go under the appointed representative regime, will be obligated to wind down those plans and return those funds. Forgive me; I cannot give absolute clarity on the detail of that process, but I am happy to engage with the right hon. Member for North Durham beyond this Chamber to give him more clarity.

[Mr Jones]

I appreciate that the Minister has been very helpful with what he has described. However, my fear is that some of those small companies may keep trading and taking money off people when we know that they are not being regulated. Are we going to get to a date beyond which, to sell a funeral plan, a company has to either be covered by the FCA or go down the route just described? That will then give assurance to customers that at least there is some protection. I am not going to ask the Minister what that date is, but we do need some indication.

[John Glen]

My understanding is that the intention is for that process to commence at the end of July. In terms of the transition and the guidance to customers, I would need to refer to the FCA on that. I shall write to the FCA and make that letter available to the House of Commons, so that people can be clear about what the situation is.

Among the questions that the hon. Member for Erith and Thamesmead asked me was one about the Government’s actions to this point. We have taken action and we did legislate to bring providers and intermediaries within the regulatory remit of the FCA. That means that from 29 July, funeral plan providers will be subject to robust and enforceable standards on the sale of their plans. In future, consumers will have greater clarity and understanding of what is covered by their funeral plans, and will not be exposed to misleading or high-pressure sales tactics—an issue raised by the right hon. Member for North Durham. For the first time, funeral plan customers will also be able to take advantage of a redress scheme provided by the Financial Ombudsman Service, and benefit from the protection of the financial services compensation scheme. That reflects the point about this being a financial services product, raised by the hon. Member for Gordon. Indeed, we have seen a massive growth in that over the period between 2016 to 2019—a growth of, I think, 175%.

That is why we are doing it. We want to ensure that there is proper regulation that is meaningful and give consumers real assurance around what protections exist. It is also about proportionate regulation. Across my brief as Economic Secretary, I want to be able to boost competition and protect consumers. That is exactly as it should be. That is what drives me in the other areas of regulation that I am looking at, such as buy now, pay later. At the same time, the Government very much recognise the impact of the change that regulation represents for providers. That is why we introduced a transition period before the new rules came into effect—to give businesses the chance to prepare and adapt.

A key priority has been to minimise any disruption to customers resulting from the transition to regulation. The FCA has therefore said that providers who decide not to obtain authorisation, or cannot obtain it, should either wind down before the regulation comes into force or transfer their plans to a provider that will operate under the new rules. The Government recently laid a supplementary statutory instrument to make such transfers easier. That is in line with my responses to earlier interventions—I am glad my speech is in line with my head.

We are aware, of course, that when we bring a sector into regulation for the first time, some providers may be unable to meet the authorisation threshold. That point has been raised with me in representations from my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) and representatives of the industry. The inability to meet those new standards due to issues with conduct, business models or trust arrangements does not mean that the regulation is at fault. Rather, the regulation is acting as a cleansing agent, weeding out unsustainable practices and preventing future consumer detriment.

Some Members have asked whether the Government are likely to compensate Safe Hands’s customers. I do not think it would be appropriate for us to set the precedent or expectation that the Government will use taxpayers’ money to compensate consumers for the misconduct of unregulated firms. The Government’s role is instead to ensure that appropriate regulation is in place to guard against such failures. However, the action of Dignity to take a lead as one of the biggest industry players, to make provision for an initial six months and develop a transition option for those who unfortunately are victims of the Safe Hands situation, is very welcome, and I call on others in the industry to follow Dignity’s example. We do not anticipate that there is something else on the scale of Safe Hands out there; we can never be sure—I do not have a crystal ball. Nevertheless, it is incumbent on the industry to continue to work with the regulator to find enduring solutions for as many people as possible.

There is no doubt in my mind that, by acting to protect consumers through a robust regulatory framework, we are doing the right thing. There was a consensus across the House: it was not just this Government, but Members from the Scottish National party and the official Opposition, who called for this action three or four years ago. A well-regulated market will also promote effective competition and do the right thing by consumers over the long term. As I have said, Safe Hands customers have been assured that they will be covered for at least another six months, and I implore others in the industry—other market participants—to take further action to protect consumers of firms that will not become authorised. Taking such action is good for consumers, but also for the reputation of the funeral plans sector. To that end, the Government and the FCA will continue to work closely with each other and the sector to ensure that the shift to regulation is as smooth as possible. That is what funeral customers deserve, and it is what they have a right to expect.

I will reflect on this debate, and if there are any matters that I feel I have not adequately dealt with, I will write to Members and publish a copy of that letter for the House to see.

Covid-19: Government Support for Business

Debate between John Glen and Kevan Jones

Thursday 16th December 2021 Commons Chamber

[John Glen]

The advice is clear: one should get the booster as quickly as possible—I did so on Saturday—take lateral flow tests and act responsibly. On Monday, I shall take my Salisbury team out for lunch.

[Mr Kevan Jones (North Durham) (Lab)]

Public health messages need to be clear and consistent, but last night the Prime Minister’s press conference was confusing and sowed turmoil in the hospitality sector. Another sector that is already hurting is small coach and bus operators, such as Stanley Travel in my constituency, who rely on Christmas and the new year for income to tide them over the fallow period of January and February. When the Chancellor comes back from his winter sun trip to California, will the Minister ensure that he does not forget the sector as we look at support in the coming months?

[John Glen]

The right hon. Gentleman legitimately raises a point about the whole range of businesses affected. That is why the Government’s priority was to give local authorities maximum discretion in how to allocate funds. As the Chancellor has done yesterday, today and every day, he will continue to focus on the needs of the economy and businesses up and down the country.

Coronavirus: Employment Support

Debate between John Glen and Kevan Jones

Thursday 19th March 2020 Commons Chamber

[John Glen]

My hon. Friend makes a reasonable point about the hospitality sector, and a very credible suggestion with respect to VAT. Across the benefits system and the tax system, we are looking at the optimisation of interventions to support the most vulnerable and most affected at this time, and to give reassurance to the whole country. We will urgently bring forward measures to address the concerns that he has raised.

[Mr Kevan Jones (North Durham) (Lab)]

Individuals are losing their jobs now—they are in desperate need now. Andrew Brown, a freelance graphic designer in my constituency, contacted me this morning; his business has folded overnight, and he cannot apply for any grants because he works from home. What does he do in that situation? The Minister talks about the great package that was announced the other night, but councils still do not have the guidance to get that money out to businesses. I urge him to get that out as a matter of urgency, because this morning Durham County Council told me that it will not be available until the weekend, and that is too late.

[John Glen]

I thank the right hon. Gentleman for his points. I accept the need to give urgent advice through the Ministry of Housing, Communities and Local Government. My understanding is that that advice will be coming tomorrow. I understand—

[Mr Kevan Jones]

It is too late—businesses are going bust now.

[John Glen]

I understand the frustration felt in the House. We are all receiving emails from constituents who are in a state of great anxiety. The Government are working—

[Mr Kevan Jones]

You are not!

[John Glen]

We are collectively working as hard as we can to come up with the right package as soon as possible.