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Companies that use high-pressure or bullying tactics to sell funeral plans could face fines and criminal charges, the government says.
The Treasury has announced proposals to regulate UK funeral providers through the Financial Conduct Authority (FCA), offering protection to customers.
Evidence shows some providers have used misleading sales tactics, costing vulnerable customers up to £5,000.
In 2018 about 177,000 pre-paid funeral plans were sold.
A spokesperson for the Treasury said there were “widespread concerns around the conduct of funeral providers” and the sales tactics used to “get customers to sign up to plans”.
Providers breaching the regulations could also have their authorisation revoked.
A consultation on the proposals is now taking place.
City minister John Glen said: “It’s shameful that there are those out there who look to prey on people when they are in this often emotional and vulnerable state.
“That’s why I’ve taken the decision to regulate pre-paid funeral plans, so people can have more confidence in the products they’re being offered and peace of mind that their affairs will be handled correctly.”
The funeral plan industry has grown nearly 200% between 2006 and 2018.
It comes as the Competition and Markets Authority (CMA) said essential costs of a funeral have increased by 6% each year, for the last 14 years.
Currently funeral plan providers can sign up to an industry regulator voluntarily – so firms can also choose not to sign up to the rules.
Under the proposals the FCA would oversee regulation of the sector, and customers would have access to the Financial Ombudsman Service.
Funeral Service provider Dignity welcomed the call for greater regulation, saying it would “protect consumers from misleading advertising and aggressive sales methods”.