Safe Hands Funeral Plans

Part of the debate – in the House of Commons at 5:02 pm on 12th May 2022.

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Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury 5:02 pm, 12th May 2022

I thank Margaret Ferrier for securing this important and timely debate on an incredibly emotive subject. I thank colleagues on both sides of the House for their contributions, including the hon. Members for Glenrothes (Peter Grant) and for Llanelli (Nia Griffith). I will specifically address the points raised by my hon. Friend Paul Maynard, and I thank my hon. Friend Andrew Jones for raising his constituent’s case.

I take this opportunity to remember our former colleague Sir David Amess. He was a friend to many of us here today, and he cared very much about helping people manage the financial impact of funerals. I thank hon. Members who have campaigned over the past few years in support of regulation. I recall conversations with Neil Gray, the former hon. Member for Airdrie and Shotts, who first tabled a private Member’s Bill to this effect in 2016.

Finally, I am grateful to hon. Members here today for the points they have raised. I think I will be able to address many of those points, and I will write to them on anything that I do not address.

As has been said, funerals are painful experiences, but they can also provide people with a degree of mental closure, because they help us to adjust to the reality of the loss of a loved one. We are all very much agreed that at such a moment mourners should be able to focus on their memories of their loved one and on their own emotions; no one should be consumed by money worries. Clearly, therefore, Safe Hands’ entering administration, as the hon. Lady accurately set out, is very distressing for its customers and their families. Obviously, she mentions eloquently the case of Mr Hughes and what he has experienced in recent weeks. Our thoughts should be with those who have recently lost someone close to them and now find themselves affected by Safe Hands’ failure. As has been mentioned, Dignity, one of the UK’s largest funeral plan providers, has stepped in to provide funerals on behalf of Safe Hands’ customers in the immediate period after the firm entered into administration. I echo the hon. Lady’s words in expressing gratitude that it has stepped up to the mark and agreed to do that for a further six months. I regret the fact that her constituent does not have clarity on exactly where that leaves him, but of course Safe Hands will be entering the administration process and that will need to be concluded before wider issues can be looked at. I met people from Dignity yesterday, along with my Treasury officials, and they reiterated their commitment for the next six months. It has been very welcome to see a funeral plan provider taking that responsibility for protecting the sector’s customers and upholding the industry’s reputation.

I had the privilege of meeting my right hon. Friend Sir John Hayes, and members of the all-party group and of the industry a few weeks ago to discuss what was happening with this difficult case. Although the Financial Conduct Authority does not yet regulate funeral plan providers, it is supporting the industry and administrators as they look to find a longer-term solution for Safe Hands’ customers. I am very hopeful that customers will not need to wait too much longer before they see further progress on this longer-term approach. However, I strongly believe that what has happened to Safe Hands is clear evidence of the pressing need for a better-regulated funeral plan market that will provide customers with the stability they need at such a difficult time and will allow us, as Members of Parliament with constituents who have been affected by Safe Hands’ demise, the reassurance and confidence that we can see them not worry in future.

Although the sector provides a valuable service, there is still some distance to travel when it comes to ensuring that all funeral plan customers are shielded from harm. Indeed, major reports and work carried out by the Treasury and the FCA revealed examples of consumer detriment in the sector. As a result, last year, we legislated to bring providers and intermediaries within the regulatory remit of the FCA. That change means that from 29 July funeral plan providers will be subject to robust and enforceable standards for the first time. These standards will benefit consumers in a number of ways, for instance, by giving them clarity about what is covered by their plans, and ending high-pressure and misleading sales tactics. In addition, for the first time funeral plan customers will be able to access a redress scheme, which will be provided by the Financial Ombudsman Service. Ultimately, we believe a well-regulated market will promote effective competition and drive better long-term consumer outcomes. I recognise that this industry does have an important role to play; the demise of Safe Hands will be dealt with through the administration process and there may well then be further examination of what happened, but my determination is that we will get this regulation right and provide security to the industry. The vast majority of firms in the industry are doing the right thing at the moment and I am clear that once they have adjusted to that new regime, we will have confidence going forward.

The Government recognise that the new regulation presents a major change for providers, which is why we introduced an 18-month transition period before the new rules came into effect. That has given businesses time to take the right steps to familiarise themselves with the new requirements and prepare to adopt them.

We of course recognise that it is paramount that we minimise any disruption to customers as a result of the changes, which is why the FCA has said that providers that decide not to or cannot obtain authorisation should transfer their plans to a provider that will operate under the new rules. Alternatively, businesses should wind down in an orderly way before the regulation comes into force.

On that note, Members may be aware that last month the Government made a supplementary statutory instrument that will make it easier for funeral plan providers that seek to exit the market to transfer their existing funeral plan to a regulated funeral plan provider. I discussed that change with Dignity yesterday, and it welcomed it. It should ease the process for the relatively small number of people who find themselves subject to a plan the provider of which will not go into regulation: they will be able to port their plan to one of the bigger industry providers.

When we bring a sector into regulation for the first time, there is clearly a possibility that some providers will be unable to meet the authorisation threshold. In addition, the process may reveal that some businesses are unable to deliver on promises they have made to their customers.