Category: Other personal lines · Reviewed by Taylor Watts, Broker · New Business · Last reviewed 2026-06-05
The FCA funeral plan regulatory regime, which took effect on 29 July 2022, brings the activities of entering into, carrying out, arranging and advising on pre-paid funeral plan contracts within the perimeter of the Financial Services and Markets Act 2000, requiring providers and intermediaries to be FCA-authorised and to comply with the dedicated FUNE Handbook sourcebook.
Category: Other retail Also known as: the FCA funeral plan regime, the FUNE sourcebook First codified: 29 July 2022 (commencement of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2021) Related legislation: Financial Services and Markets Act 2000, sections 19 and 22; FSMA 2000 (Regulated Activities) Order 2001, articles 59 and 59A; FCA Handbook FUNE Apex Wiki link: /wiki/funeral-plan-fca-regulation/
The funeral plan FCA regulation regime is the body of statutory and regulatory rules that govern the sale and administration of pre-paid funeral plans in the United Kingdom from 29 July 2022. Before that date, funeral plans were outside the perimeter of regulated financial services, governed only by the voluntary code of the Funeral Planning Authority [1].
The regime has two layers. The statutory layer is the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2021, which amended the Regulated Activities Order 2001 to make ‘entering into a funeral plan contract as provider’ and ‘carrying out a funeral plan contract as provider’ regulated activities under articles 59 and 59A respectively [2]. Once an activity becomes regulated, section 19 of the Financial Services and Markets Act 2000 — the general prohibition — bars any person from carrying it on by way of business in the UK without authorisation or exemption [3].
The conduct layer is the FCA’s Funeral Plans sourcebook (FUNE), a dedicated Handbook module that sets out detailed product, sales, prudential and consumer-protection rules for providers and intermediaries [4]. FUNE is supplemented by the cross-cutting Consumer Duty (PRIN 2A) [5] and the FCA’s Senior Managers and Certification Regime (SM&CR) [6].
Together these rules transformed a previously self-regulated cottage market into a fully regulated financial services sector. As at the regime’s launch on 29 July 2022, only about 24 providers were FCA-authorised, against more than 60 trading before the regime took effect — the remainder either exited the market, were acquired, or failed during transition [7].
The legislative pathway began with HM Treasury’s 2018 call for evidence, which identified material consumer harm in the pre-paid funeral plan sector including aggressive sales tactics, poor product transparency, lack of redress, and provider failures resulting in loss of consumer funds. The subsequent 2019 consultation set out the proposed framework, and the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2021 (SI 2021/90) was made on 26 January 2021 and brought into force in stages, with the substantive prohibition operative from 29 July 2022 [2].
The 2021 Order added a new section to article 59 of the Regulated Activities Order 2001, defining a funeral plan contract as ‘a contract under which a person makes one or more payments to another and the other person undertakes, on the death of the first person or another person, to provide a funeral in the United Kingdom’ [2]. The exclusions are narrow: contracts which are themselves insurance contracts; contracts where the funeral is to be provided within one month of payment; and certain charitable arrangements.
The FCA published its near-final FUNE rules in November 2021 and the final rules in policy statement PS22/1 in February 2022 [8]. FUNE 3 contains the trust and insurance requirements, requiring at least 95% of moneys paid by the customer to be held either in a trust meeting prescribed standards or in a whole-of-life insurance policy assigned to the provider. FUNE 4 sets the conduct of business rules: the Plan Summary Document, suitability assessment, post-sale support and the prohibition on cold calling. FUNE 5 contains the prudential rules: capital requirements, governance and reporting.
The Financial Services Compensation Scheme is funded to protect FCA-regulated funeral plan contracts entered into on or after 29 July 2022, and the Financial Ombudsman Service has jurisdiction over complaints from the same date [9].
For consumers, the practical effect of the regime is that any pre-paid funeral plan sold in the UK since 29 July 2022 is sold by an FCA-authorised firm. The Financial Services Register at register.fca.org.uk allows a buyer to confirm authorisation before purchase.
The pre-sale process must include a Plan Summary Document setting out, in standardised form, what is covered, what is excluded, the total cost, the payment terms, and the cancellation rights. The provider must conduct a suitability assessment based on information gathered from the customer, including age, health, financial circumstances and the type of funeral wanted. Cold calling for funeral plans is prohibited under FUNE 4.2 — a direct response to the harm identified in the 2019 consultation.
Commission arrangements are restricted. Under FUNE 4.4, providers must demonstrate that any commission paid to intermediaries (including funeral directors) is consistent with the Consumer Duty obligation to deliver fair value [5]. A small number of providers operate commission-free models, while others continue to use intermediated distribution with disclosed commission.
For providers, the prudential and operational requirements are substantial. Authorised firms must hold at least 95% of plan monies in a qualifying trust or insurance policy, must publish annual fair value assessments, must operate within capital requirements set by the FCA, and must comply with the SM&CR regime for senior management accountability.
Intermediaries (including funeral directors acting as agents) require their own FCA authorisation or appointment as Appointed Representatives of an authorised principal. Many funeral directors who previously sold plans on a casual basis withdrew from the market during the transition due to the cost of authorisation.
Where a provider fails, the Financial Services Compensation Scheme operates through a successor mechanism: it seeks to transfer plans to a successor provider so that the funeral can still be delivered, with cash compensation only where transfer is not possible. The first significant exercise of this mechanism was the orderly wind-down of Avalon Funeral Plans in 2023, where plans transferred to a successor provider with consumer loss minimised.
The Order distinguishes between provider activities (entering into and carrying out the contract) and intermediary activities (arranging and advising). A firm may be authorised for one, the other or both.
Trust-backed plans sit under FUNE 3.2, with the moneys held in a discretionary trust meeting prescribed solvency standards. Insurance-backed plans sit under FUNE 3.3, with the moneys used to pay premiums for a whole-of-life policy assigned to the provider.
Pre-29 July 2022 plans remain outside the FCA perimeter for the contract itself, although providers who continue to administer such plans must hold FCA authorisation. Consumers with legacy plans benefit from the FCA’s oversight of the administering provider but the contract terms themselves are not retrospectively re-papered.
The transition population — providers who applied for but did not receive authorisation before 29 July 2022 — were either acquired, wound down through the FSCS successor process, or failed. The most significant failures were Safe Hands Plans Limited (March 2022) and Pride Planning (2022), both of which collapsed before the regime took effect and accordingly before FSCS protection was available.
An illustrative example. A consumer in 2026 wishes to buy a funeral plan. The consumer first checks the FCA Financial Services Register and identifies an authorised provider. The provider sends a Plan Summary Document setting out a £4,500 standard funeral plan. The consumer is asked a series of suitability questions about age, health, dependants and funeral preferences. After a 14-day reflection period, the consumer signs the contract and pays £4,500.
The provider places £4,500 into its qualifying trust (FUNE 3.2) on the next business day. The trust meets the FCA’s solvency and governance requirements. The provider issues a confirmation and a 30-day cancellation window. If the consumer cancels within 30 days, FUNE requires a full refund.
In 2032, the consumer dies. The provider arranges the funeral through its panel of funeral directors, draws funds from the trust to pay the funeral director, and the family arranges the disbursements (crematorium fees, doctors’ fees) with a top-up of £350 over the original disbursement allowance.
If the provider had failed in 2030, the Financial Services Compensation Scheme would have arranged for the plan to be transferred to a successor provider so that the funeral could still be delivered [9].
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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