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Is your funeral plan provider on the FCA blacklist?

Nearly two dozen funeral homes banned by city watchdog – now beware of law firm trying to cash in on crisis

Tens of thousands of elderly people are at risk of losing huge sums of money after nearly two dozen funeral homes were banned from operations last week.

And today, Money Mail can reveal that a law firm is already trying to cash in on the crisis by touting claims of misselling.

The company claims it can help customers with unscrupulous providers get compensation. But it can take as much as 40 percent of any payout, and the city’s watchdog is urging people to be wary.

Nearly two dozen funeral homes were banned from operating last week

Funeral plans typically cost between £3,000 and £4,000 and offer peace of mind to customers who don’t want their loved ones to face huge bills when they pass away.

The industry was previously unregulated and offered little protection to those who bought plans should something go wrong.

However, since last Friday, companies have been required to pass strict controls set by the Financial Conduct Authority (FCA). They are also prohibited from making unsolicited calls to potential customers.

Anyone wishing to purchase a subscription is now urged to check if the provider is on the regulator’s list of authorized companies.

Some 26 companies have been approved, covering more than 87 percent of the estimated 1.85 million plans sold. But 23 did not apply for a permit or did not comply with the new rules. They include a range of companies that have gone out of business in recent months, including Safe Hands, which had about 46,000 customers.

Those affected are still waiting to find out if they will get their money back. And many are among those targeted by lawyers working for a Manchester-based firm called Barings Law.

The company promotes itself on Facebook and says it can help people claim wrongly sold policies. One ad features a message Photoshopped onto a headstone that reads, “If your funeral director is on this list, take immediate action.”

It then invites prospective claimants to “learn more” by submitting a “ten-second form.”

A spokesperson for Barings Law was vague about how it would prove a historic mis-selling case. He says claims “generally focus on whether the companies are able to deliver the plans they sell.”

“There are other reasons why a subscription could be missold, such as if the first point of contact was through cold calling, or if undisclosed commissions or fees are paid to a third-party intermediary without the customer’s knowledge,” he adds.

But while Barings says claims will be on a no-win, no-fee basis, funeral plan holders have told Money Mail they could lose up to 40 percent of any payout in compensation.

A spokesperson says the charges will depend on “the route taken to settle a claim”.

Attorney Gary Rycroft, of Joseph A. Jones & Co, says: “The new rules and regulatory requirements are not retroactive, so my concern is that the mass advertising, including that through Barings’s law, can give false hope and therefore potentially exploitative for people who have been mis-sold in the past.”

Those affected are still waiting to find out if they will get their money back

Those affected are still waiting to find out if they will get their money back

Good news for plan holders: The Financial Ombudsman Service has now said it will consider landmark complaints if the provider was a member of the trade organization the Funeral Planning Authority.

Mr Rycroft adds: ‘If that is the case and a consumer has a potential claim, my advice would be that he pursue it himself rather than share a high percentage of what is recovered with a law firm or claims company.’

Many remaining companies have agreed to take over the plans of those leaving the market, so you should check with your provider to find out what its plans are. And customers of some failed businesses can get a full or partial refund through administrators, once the business is liquidated.

James Daley, of consumer group Fairer Finance, suggests this may be a better route for customers seeking a payout.

He says: ‘It seems opportunistic on the part of the law firms. The risk is that you have to wait longer and get less than you would have received through the administrators.’

However, refunds are far from guaranteed. Earlier this year, a court heard that customers of Safe Hands from Wakefield may be refunded as little as £108 each.

And administrators for Unique Funeral Plans have already confirmed that none of its customers will receive refunds or have their funerals honored by the company.

Rival company Dignity has agreed to honor funerals for Safe Hands customers until the end of October.

An FCA spokesperson said: “We urge consumers to be alert to anyone who claims they will help them file a claim against a funeral insurance provider.”

A spokesperson for Barings denies the charge that it is “giving false hopes” to customers, adding that it wants to “speed up” the process.

He says, “We are representing multiple claimants against the same provider, which we believe gives our customers more power and increases the likelihood of success.

“We always make it clear to clients that they can file claims without going through a law firm.”