Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps the Government is taking to ensure that customers of Safe Hand Funeral Plans are (a) compensated and (b) transferred to new funeral plans from approved funeral providers.

In January 2021, the government legislated to bring all pre-paid funeral plan providers and intermediaries within the regulatory remit of the Financial Conduct Authority (FCA) from 29 July 2022. This will ensure that, for the first time, consumers are protected by compulsory and robust regulation. To address broader risks posed by providers not obtaining authorisation, on 21 April the government made a supplementary statutory instrument which will make it easier for regulated funeral plan providers to take on the customers of providers that are exiting the market. This will protect consumers – particularly during the transition to regulation – by ensuring that more funeral plan holders benefit from continued plan coverage.

Safe Hands Plans went into administration in March 2022. The government understands that this will be concerning for customers of Safe Hands and continues to monitor the implementation of regulation in this sector closely.

Dignity’s recent commitment to provide ongoing support to Safe Hands’ customers until November 2022 is welcome. This will ensure that any planholders who pass away during this time will receive a funeral without any additional charge.

While the FCA does not yet regulate funeral plan providers, it is supporting the administrators and the wider industry as they look to find a longer-term solution for Safe Hands’ customers.

It is unfortunate but unavoidable that bringing a previously unregulated sector into regulation – whatever form that may take – creates a possibility that some providers are not able to meet the threshold for authorisation. However, a well-regulated market should promote effective competition and drive better outcomes for consumers in the long-term.

Where a provider is unable to obtain FCA authorisation because of underlying issues, it is important to understand that this is not an issue created by bringing the sector into regulation. Rather, bringing the sector into regulation exposes these unsustainable business models and prevents these problems from getting worse.