Funeral plan regulation – December 2021 update

Dec 10, 2021 12:00:00 AM

What has happened to funeral plan regulation?

The FCA published on its website more information for funeral plan (FP) providers and intermediaries since we issued our first blog post on the regulation of the pre-paid funeral plan sector, available here.

Also, in its Handbook Notice 90, published on 23 July 2021, it confirmed, with some minor changes, the fee arrangements as originally proposed for funeral plan firms and applicable with effect from 1 September 2021.

In its Consultation Paper 21/33, issued on 30 November 2021, the FCA confirmed the following in relation to the periodic fees to be payable by funeral plan firms;

FP firms are being brought into the scope of FCA regulation from July 2022. We consulted on FP application fees and our approach to periodic fees in April 2021. In July 2021, we provided feedback on the consultation responses and set the application fees. To help FP firms with their business planning, we also quoted an indicative variable rate for periodic fees of around £15 per £1,000 of regulated income. We will consult on the final rate for 2022/23 in spring 2022. The fees for 2022/23 will be based on the income data that firms provided with their applications.

We are now consulting on how we should collect the data required to calculate periodic fees going forward and on whether we should exempt FP firms from the annual charge for appointed representatives (ARs). The periodic fees for FP firms will be based on their annual income from regulated FP activity. In April 2021 we consulted on extending to FP firms our standard definition of income in FEES 4 Annex 11AR, along with the guidance in FEES 4 Annex 13G Table 1, and we confirmed the position in July 2021. FP firms should report their annual income from regulated FP activity for their latest financial year.

Also in July 2021, we finalised the regulatory returns that FP firms will start to submit from 29 July 2022 when pre-paid funeral plans come into our regulation. It will be most convenient, both for ourselves and firms, if FP firms provide the information required for fees as part of their standard regulatory reports rather than submitting it separately. We accordingly propose to introduce a section on fees into their half-yearly prudential reports. This will enable FP firms to submit their data when their financial year-end falls within the reporting period. The regulatory returns will be in SUP 16 Annex 50AR, with guidance in SUP 16 Annex 50BG. They have been published in Appendix 1 of PS21/08 (pages 171–194). Form FPR003a will be completed by providers and form FPR003b by intermediaries. We propose to add a new Part 4 on fees at the end of both returns, as set out in Table 4.1.

What do you need to do?

This additional information, available here, includes more detail on how the FCA plans to regulate firms, how to apply for authorisation and appointing or becoming appointed representatives or introducer appointed representatives. There are pages specifically for providers and intermediaries.

How can we help you?

If you’d like to know more about how we can help you with your funeral plan regulation or any other regulatory compliance issues, our expert team is here to help.

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