After a company recently went bankrupt, costing 46,000 people, the government was urged to set up an emergency fund to help the victims of the failed funeral company.
In March, Safe Hands collapsed into administration, taking a toll on customers who were using it to cover funeral expenses.
Activists warned that other companies could also fail, putting their customers into “funeral poverty.”
FRP, a restructuring firm appointed to oversee Safe Hands’ management, said the company’s treasury did not have enough funds to cover the promised amount.
Over the next six months, Dignity, one of the UK’s largest undertakers, has agreed to provide funerals for Safe Hands clients on a “non-profit” basis and will provide plans to surviving clients.
However, many will lose money as a result of the collapse.
The Safe Hands failure comes at a critical time for the funeral sales industry, which will face stringent new regulations starting July 29th. Financial Supervisory Service (FCA).
Among the new safeguards for consumers are bans on certain selling tactics, such as cold calls. customer also Financial Services Compensation SchemeSo if the plan providers fail, their money is protected.
To continue operating, funeral sellers must pass rigorous tests set by the FCA to be approved. We are concerned that these changes will expose weak players in sectors that have been criticized for their aggressive selling strategies and low value.
Civil society groups start petitioning the government to raise funds for victims of a failed company. Fearing that more people will find themselves in the same situation as Safe Hands customers, they are urging the government to “protect victims from funeral poverty.” If the petition is signed by 10,000 people, the government must respond.
The FCA website shows: Status of each company’s application for authorization. Of the 66 funeral planning companies listed, 12 had their applications denied or withdrawn, 15 plan to transfer their plans to another provider, and 7 never applied.
An FCA spokeswoman said those who bought a prepaid funeral plan from Safe Hands “will of course be concerned.”
“Government changed the law to introduce prepaid funeral plans under our rules starting at the end of July 2022. Until then, companies like Safe Hands are unregulated and we have limited powers,” they say.
“We are currently reviewing applications from businesses to ensure they meet the standards required for regulation, and we have established rules for businesses to follow starting July 29, including protecting consumers if businesses fail.”
The collapse of the Safe Hands left a trail of distress. The call center established by FRP was flooded with 15,000 calls from concerned plan holders.
Among them are Essex’s wife, Susan and John Ogilvie, who have spent £8,000 on two funeral plans. Susan says she used her savings to buy a plan “so nobody cares,” but now she’s lost most of her money.
“My sister’s husband passed away a few years ago and I had no money,” Susan says. “The funeral director wanted £2,000 upfront, but she didn’t have it,” she said. Fortunately, we are not in that position. But you never know. I didn’t want someone to go to the undertaker and say, ‘I don’t have the money to buy it.’”
FRP is still reaching the bottom of what happened to Safe Hands’ cash, but recent updates have painted a grim picture.
The private equity-backed company used two fund managers to invest its clients’ money, one of which has gone into liquidation, FRP said. He holds about £4 million in cash and shares in UK publicly traded companies that are available for sale. However, a significant percentage has been invested in high-risk investments, often in offshore jurisdictions.
Dignity will solicit additional donations from customers who choose to transfer their plans. It says it will price these new plans “as low as possible,” allowing customers to potentially spread costs over five years.
Mike Hilliar, Director of Funeral Planning at Dignity, said, “What happened at Safe Hands is a disgrace and shows why the discipline and safety of the rules are necessary and overdue. “We have worked with managers to ensure that bereaved families do not go to funerals. However, this is only a short-term solution. In the long term, we are developing a solution for funeral planning customers to choose to transition to Dignity funeral planning.”
Fairer Finance managing director James Daley said the Treasury would be right to reward customers left in their pockets as a result of new regulations in the sector.
Daley said, “I thought the Treasury was at risk on this issue because, at the moment this rule was introduced and bad actors were out of the market, regulatory action would crystallize losses for many who had plans. .” he said. he says
“Safe Hands has always been the biggest company that was going to go out of business, but there are still a lot of small and medium-sized businesses that are still in the dark.”
An HM Treasury spokesperson said introducing prepaid funeral plans into regulation could protect consumers from bad practices in the sector.
They added: “We recently introduced secondary legislation to make it easier for regulated funeral planning providers to accept the customers of exiting providers. This will protect consumers, especially during the transition to regulation, by allowing more funeral planners to benefit from ongoing planning assurance.”