Pre-paid funeral plans: FCA rules, FSCS cover and what to check

What a pre-paid funeral plan is

A pre-paid funeral plan is an arrangement under which a person pays now, or over time, for funeral services that will be provided later. The plan sets out what is included, such as a funeral director's services, a coffin, transport and arrangements on the day. Payment can usually be made as a lump sum or by instalments, and the plan is typically backed either by a trust or by an insurance policy. The money is held for the future rather than being spent immediately, and the provider is responsible for making sure the agreed services are delivered when they are needed.

A pre-paid funeral plan is not the same as over-50s life cover, which pays a cash sum to nominated people and does not usually specify funeral services. It is also different from simply saving money, because a plan normally fixes the services in advance and the provider takes on the task of arranging them. A plan may cover only the funeral director's costs, or it may also contribute towards third-party costs such as crematorium fees, minister fees or a burial plot. What is and is not included varies between plans, so the terms of each plan matter. Some plans allow the person to choose a funeral director, while others use a panel or a specific firm. The value of a plan can depend on whether the provider remains able to deliver it, which is why regulation and protection arrangements are relevant to anyone considering one.

What FCA regulation changed in July 2022

On 29 July 2022 the Financial Conduct Authority began regulating pre-paid funeral plans. Before that date the market operated under a different framework, and the change brought firms within the FCA's authorisation regime. At the start of regulation the FCA authorised 26 providers holding approximately 1.6 million plans, which represented 87% of the market. Firms that did not obtain authorisation had to transfer their plans to an authorised provider or refund customers, and they could not continue to sell or carry out plans. Selling a pre-paid funeral plan without authorisation is a criminal offence unless an exemption applies, such as for solicitors. Providers and intermediaries, including funeral directors, will writers and lead generators, must be authorised or act as appointed representatives.

The rules introduced from 29 July 2022 include a ban on cold calling and a ban on commission paid to intermediaries. They also set standards on governance and financial resilience, so that providers are expected to manage their affairs prudently and to have arrangements in place if they cease trading. A cooling-off period applies, giving customers time to reconsider after buying. Customers of authorised providers have access to the Financial Ombudsman Service, including for some issues that happened before July 2022 where the firm was then registered with the Funeral Planning Authority. The FCA's consumer information, updated on 6 March 2026, states that a provider must be authorised and have permission for the right activities. Without that, there is no access to the Financial Ombudsman Service or the Financial Services Compensation Scheme, and it is unlikely that money would be recovered.

The 85,000 pound FSCS safety net

For all types of funeral plan claims, protection from the Financial Services Compensation Scheme is up to 85,000 pounds per eligible person, per firm. This applies where the provider is authorised and the claim meets the scheme's rules. Compensation is calculated by reference to what it would cost to buy the same plan on today's market, rather than simply returning the amount paid. That approach reflects the purpose of the protection, which is to put the customer in a position to obtain equivalent funeral services. The limit is a cap, so a plan whose equivalent cost exceeds 85,000 pounds would not be fully covered by the scheme. The figure applies per eligible person and per firm, so separate claims against separate firms are treated separately.

If a provider goes out of business, it should have arrangements for a new regulated provider to carry out the plan. Those arrangements are part of the expectation that firms plan for continuity, and they can mean that services continue without a compensation claim being needed. The scheme's protection is not a substitute for checking the provider's status, because it depends on the provider being authorised and on the claim being eligible. Funeral plan firms that are not on the Financial Services Register must not sell or carry out funeral plans in the UK. A customer who deals with an unauthorised firm therefore faces a different position, with no scheme protection and no ombudsman access. Checking the register before paying is a practical step that determines whether these protections can apply at all.

Complaints and sales rules

Customers of authorised providers can complain to the Financial Ombudsman Service. The ombudsman can consider complaints about authorised firms, including some issues that happened before July 2022 where the firm was then registered with the Funeral Planning Authority. This gives a route to an independent decision that does not depend on going to court. The FCA's rules also changed how plans can be sold. Cold calling is banned, so a firm should not make unsolicited approaches of that kind. Commission paid to intermediaries is banned, which removes a payment that could otherwise influence what a customer is offered. These rules sit alongside requirements on governance and financial resilience, and a cooling-off period that allows a customer to cancel after buying.

Clear disclosure is part of the framework. A customer should be told what the plan includes and what it does not include, so that expectations match the services that will be provided. That matters because third-party costs, such as crematorium fees or minister fees, may or may not be covered, and the position can change over time. The cooling-off period gives a chance to review the documents and to cancel if the plan is not suitable. If a problem arises, the ombudsman route is available for authorised firms, and the compensation scheme may apply if the provider fails. These protections are linked to authorisation, so a customer who buys from an unauthorised seller does not have the same options. The sales rules and the complaints route are therefore part of the same system that begins with checking whether the provider is authorised.

What to check before you buy

Before paying, check the provider's status on the Financial Services Register. The provider must be authorised and have permission for the right activities. If it is not on the register, it must not sell or carry out funeral plans in the UK, and there would be no access to the Financial Ombudsman Service or the Financial Services Compensation Scheme. It is also worth checking whether the person or firm selling the plan is authorised or an appointed representative, because funeral directors, will writers and lead generators can be involved in sales. The register entry shows the permissions a firm holds, and those permissions determine what it can lawfully do. A check of the register is a factual step that can be done before any money is paid.

Next, establish what the plan covers. Funeral director fees may be included, while third-party costs such as crematorium and minister fees may be separate, and the same applies to costs like a burial plot or additional services. Ask about cancellation terms and the cooling-off period. If paying by instalments, ask what happens if the person dies before the plan is paid in full, because the answer affects what the family receives. Ask whether the provider or a named funeral director will deliver the plan, and what happens if that funeral director is unavailable. Ask how the plan is backed, whether by a trust or an insurance policy, and what arrangements exist for another regulated provider to take the plan on if the provider fails. These questions produce written answers that can be compared, and they relate directly to the protections that apply to authorised providers.

Alternatives

There are alternatives to a pre-paid funeral plan. One is to save money, for example in an ISA, and to leave instructions about the funeral that is wanted. This keeps the money accessible and under the saver's control, but it does not fix the cost of services and it depends on the money being available and used as intended. Another is over-50s life insurance, which pays a cash sum to nominated people. That money can be used towards funeral costs, but the policy does not usually specify funeral services and the payout may not match the cost of the funeral that is arranged. A third option is to leave instructions in a will, which can record preferences and wishes, although a will is not always read before a funeral takes place and it does not itself pay for the services.

Each option has different features. A pre-paid plan fixes services in advance and places the arrangements with a provider, subject to regulation and the protections described above. Saving keeps flexibility but leaves the cost risk with the saver. Over-50s life cover provides a cash sum but not a defined funeral service. Instructions in a will can guide those arranging the funeral but do not provide funds. None of these is right for everyone, and the choice depends on individual circumstances, including how much can be paid and when, and what level of control is wanted. What matters is that the features of each option are understood before a decision is made, and that any provider of a pre-paid plan is checked on the Financial Services Register.

Source: FCA: funeral plans, check your provider is authorised.

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Frequently asked questions

What is a pre-paid funeral plan?

It is an arrangement to pay now, by lump sum or instalments, for funeral services to be provided later. The plan sets out what is included and is typically backed by a trust or an insurance policy.

When did the FCA start regulating pre-paid funeral plans?

The FCA began regulating pre-paid funeral plans on 29 July 2022. At that point it authorised 26 providers holding approximately 1.6 million plans, which was 87% of the market.

How much does the FSCS protect for funeral plan claims?

For all types of funeral plan claims, protection is up to 85,000 pounds per eligible person, per firm. Compensation is calculated by reference to what it would cost to buy the same plan on today's market.

Can I complain to the Financial Ombudsman Service about a funeral plan?

Customers of authorised providers have access to the Financial Ombudsman Service, including for some issues that happened before July 2022 where the firm was then registered with the Funeral Planning Authority.

What sales rules apply to pre-paid funeral plans?

FCA rules from 29 July 2022 include a ban on cold calling and on commission paid to intermediaries, standards on governance and financial resilience, and a cooling-off period.