Reports that directors of failed funeral firm Safe Hands ‘helped themselves’ to £60 million trust money ahead of regulation being imposed has set alarm bells ringing in the industry.
On July 29, 2022, firms who offer pre-paid funeral plans will be regulated by the Government’s Financial Conduct Authority (FCA). Those firms which decline to be regulated must cease trading. Ahead of the deadline there are increasing concerns that some companies will deliberately go bust taking with them the cash invested in them by their customers.
The concerns are genuine following the collapse of Safe Hands whose 46,000 customers will almost certainly lose all their money invested at an average of £4,000 a plan. Media reports have revealed a scandal in which the directors of Safe Hands cynically looted the £60 million pounds held in trust by the company paying themselves vast dividends and hiding millions in other investments and luxury lifestyles.
There are nearly two million people who have taken out pre-paid funeral plans with some 65 companies paying on average around £4,000 each in the UK with an estimated 200,000 new plans sold every year. It’s a growing market but without regulation (declined by David Cameron’s Government in 2000) it has become something of a free for all since anyone can set up a company offering so-called peace of mind plans.
Day time TV is saturated by firms offering customers to pay over several years for plans which mean their relatives won’t have to find the money to pay for their funerals. It’s a good idea for those who can afford it but without regulation there is no knowing that their money is safe if the firm goes into administration as promises made as it the case of Safe Hands to ring fence the funds were broken.
Now there is concern over other companies collapsing with their investors cash before July 29. Heavenly Services went bust in February leaving their customers without any cash despite having taken thousands of pounds in payment plans and there are increasing concerns over more of these companies crashing.
Checkaco’s spokes person said there are some tried and tested companies like the Co-op but if you are considering taking out a pre-paid plan then do a Checkaco credit check on them or wait until after July 29.
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