Smart Money: If I don’t die in three weeks my funeral plan pot might be empty

Question: About five years ago I contracted cancer and had treatment. I went to a will writer to get my affairs in order and was sold a funeral plan which I paid in full over three instalments. Not long ago, I got a letter from the will writer saying they had gone into receivership and if I didn't pass away within three weeks they could not guarantee having the funds to pay towards my funeral. It is now not guaranteed I will have any cover. What can I do?

Answer: What a nasty surprise. When you buy a funeral plan you’re paying for peace of mind – for the comfort of knowing that when you die your loved ones will have one less thing to worry about. Funeral costs have risen by 121 per cent since 2004, but with a funeral plan you can lock in today’s prices (the average basic funeral cost £4,056 in 2021, according to Sun Life). They also allow you to make your own funeral arrangements in advance, helping you to ease the administrative burden as well as the financial burden your family could face in future.

That’s the idea, anyway. Sadly, peace of mind is the last thing you’ve got right now. You don’t mention the plan provider’s name, but I’d hazard a guess that it’s Safe Hands, which collapsed in March leaving 46,000 customers in the same stressful position.

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In terms of what you can do – I’m afraid the answer is very little. Unlike most other financial firms, funeral plan providers are not (yet) regulated. This means your money isn’t protected under the Financial Services Compensation Scheme (FSCS), which can step in when a financial firm goes bust.

Funeral costs have risen by 121 per cent since 2004, but you can lock in today's prices with a funeral planFuneral costs have risen by 121 per cent since 2004, but you can lock in today's prices with a funeral plan
Funeral costs have risen by 121 per cent since 2004, but you can lock in today's prices with a funeral plan
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Instead, you face a nervous wait to find out how much you might be able to get back once the administrators have established the remaining value of the company’s assets. What is clear, unfortunately, is that this will be nowhere near a full refund of what you originally paid for the plan. In fact, the administrators for Safe Hands, FRP Advisory, estimate that it could be just 10-20p in every pound.

If you paid for your plan (in part or full) by credit card, it’s worth making a Section 75 claim with your card provider, to see if you can recover your money that way. Be wary of anyone contacting you out of the blue claiming to be from Safe Hands, FRP Advisory or any related firms, as it could be a scam.

Any Safe Hands plan holders who die between now and October will have their funeral covered by Dignity, one of the largest funeral plan providers in the UK. Dignity also intends to offer Safe Hands customers a replacement plan, which it says will be priced “as cheaply as possible”.

The Safe Hands saga powerfully illustrates the need for better oversight of the funeral plan industry and stronger consumer protections. The market as a whole has earned a less than rosy reputation over the years, with high-pressure sales tactics and misleading information resulting in many customers taking out plans that weren’t right for them.

Thankfully a crackdown is imminent. From 29 July, firms must be authorised by the Financial Conduct Authority to sell or administer funeral plans. As part of the FCA’s new rules, firms will be banned from making cold calls, and there will be stricter advertising standards to make sure plans are sold fairly.

Regulation also means that customers will be able to escalate any complaints about their provider to the Financial Ombudsman Service, and will be covered by the FSCS in the event that their provider collapses.

Unfortunately this comes too late to help you, but it’s good news for funeral plan customers in general. Any other readers with a funeral plan can check whether their provider is likely to be authorised by going to

Jenny Ross is editor of Which? Money

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