The Financial Conduct Authority (FCA) has warned consumers not to purchase products from two funeral plan providers.
The warning comes ahead of a change in the law which brings funeral plans under FCA regulation from 29 July.
The regulator said it strongly advised consumers that that they do not buy a plan from Empathy Funeral Plans or Unique Funeral Plans.
It added it had been clear for some time that people should avoid buying new plans from funeral plan providers that have not applied for authorisation or had their application withdrawn or refused.
The FCA revealed that Empathy had withdrawn its application for authorisation to sell and carry out funeral plans on 22 April.
It regulator subsequently asked Empathy not to sell any further plans and to inform customers of its withdrawn status as it will not be able to sell funeral plans after 28 July 2022.
In a statement sent to Health & Protection the company confirmed it had ceased selling new plans from the 22 April and notified the FCA of this in writing immediately, adding it was confused as to why the FCA had issued the warning.
Misleading statement
According to the FCA, Unique Funeral Plans has not applied for FCA authorisation so it will not be able to sell and carry out funeral plans after 28 July.
The regulator added the firm had not responded to its requests for details of its plans for existing customers and highlighted a potentially misleading claim about its protection of consumer funds.
As of 24 May, Unique Funeral Plans’ terms and conditions stated that ‘any payment you make to Unique Funeral Plans is held in the secure Unique Funeral Plans Trust which is independently managed by The Sterling Trust Corporation Ltd’.
The FCA further revealed Sterling Trust Corporation Limited has published the following statement on its website: “Sterling Trust Corporation Limited has not been appointed by Unique Funeral Plans (or any company affiliated with Unique) to act as a Trustee and as such these statements are not true.
“For the avoidance of doubt, Sterling Trust Corporation Limited has never received any customer funds from Unique Funeral Plans and does not manage money on behalf of Unique Funeral Plans.
“Unique Funeral Plans have been requested to remove these incorrect and misleading statements from their website.”
Unique Funeral Plans has been approached for comment but had not responded by publication.
Not FSCS protected
The FCA added that while it does not currently regulate the funeral plan sector, even ahead of 29 July, funeral plan providers have obligations not to sell products or services they know cannot be delivered, which includes when they know they will not become authorised.
The FCA advised anyone considering a funeral plan should only use a provider that has applied for FCA authorisation as set out on its website.
As the FCA does not regulate these firms, it pointed out it cannot answer any enquiries from existing funeral plan customers, adding consumers should contact the relevant firm about its future plans. Funeral plans are not currently protected by the Financial Services Compensation Scheme (FSCS).