Advice for Funeral Plan Providers


FCA regulations and providers of pre-paid funeral plansInsolvency advice for Pre-Paid Funeral Plan providers, being a previously unregulated industry, entering the market for pre-paid funeral plans was quite simple.

However, Financial Conduct Authority (FCA) regulation went into effect in July 2022, bringing with it far-reaching reforms to the industry.

This has compelled many funeral plan providers to reevaluate their alternatives, and in some cases, to permanently close their doors.

If you need help shutting your pre-paid funeral plan business and liquidating it, consult with a professional insolvency practitioner first.

FCA regulations and providers of pre-paid funeral plans

To continue marketing and providing funeral plans, all funeral plan providers and middlemen must now acquire the required FCA authorisation. Individuals who had not been authorised (or who were exempt from the laws) by July 29, 2022, were legally obligated to cease marketing and administering funeral plans.

FCA regulation means that there are now stronger standards for corporate governance and financial stability, as well as extra marketing laws (including a prohibition on cold calling) and a prohibition on commission payments to intermediaries.

Consumers now have access to the Ombudsman, which means that complaints can be forwarded if no resolution is reached, and plan holders will be protected by the Financial Services Compensation Scheme (FSCS) if their provider goes out of business or ceases to trade.

Funeral plan firms have the option of closing and liquidating

While these improvements improve consumer protection and should assist to enhance industry standards, it does mean that certain businesses will no longer be allowed to operate. If you operate as a pre-paid funeral plan provider or intermediary (including funeral directors) and have not applied for FCA authorisation, or if your application for authorisation was rejected, you are no longer authorised to trade and must consider how to end your business.

If you are contemplating the future of your funeral arrangements company following the introduction of FCA regulations and are considering closing the business, you should contact a registered insolvency practitioner as soon as possible. An insolvency practitioner can walk you through the many options for closing down your pre-paid funeral plans business, as well as what each option means for your firm, employees, and existing plan holders.

We can advise you whether the company is solvent or insolvent, and we can assist with you to wind it down in an orderly manner.

Prior to closure, you may be able to transfer your back book of existing plans to another provider with sufficient authorisation; your designated insolvency practitioner will be able to go over this with you in greater detail.

Closure options for a funeral plan business

There are two opens that are available to close a funeral plan business there are:

Company Administration

In the unfortunate event that a funeral plan business becomes insolvent or simply not being able to acquire the right permissions to act, company administration refers to the process of managing the business and its affairs in order to maximise returns for its creditors.

An insolvency practitioner is appointed to take over the management of the company and determine the best course of action to address its financial difficulties. This may include negotiating with creditors, selling assets, or restructuring the company’s debts. The insolvency practitioner must act in the best interest of the creditors and seek to recover as much of the debts owed as possible.

If the business cannot be saved, the insolvency practitioner may have to liquidate the company’s assets and distribute the proceeds to the creditors.

Company administration can be a complex process, and it is important to seek professional advice to ensure that the interests of all parties are taken into account.

Creditors Voluntary Liquidation

Creditors Voluntary Liquidation process is a formal insolvency procedure that may be considered by a funeral plan business if it is unable to pay its debts and has no reasonable prospect of recovery. A CVL allows the directors of the business to take control of the liquidation process by appointing an insolvency practitioner to act as the liquidator.

The liquidator will then realize the assets of the business and distribute the proceeds to its creditors. In a CVL, the creditors are given the opportunity to vote on the appointment of the liquidator and approve the terms of the liquidation.

By entering into a CVL, the directors of a funeral plan business can demonstrate their commitment to an orderly wind-up of the business, minimise the risks of wrongful trading, and avoid personal liability for the company’s debts.

Frequently asked questions

When should a funeral plan business seek insolvency advice?

A funeral plan business should seek insolvency advice as soon as it becomes aware of financial difficulties that it cannot overcome. This could include a significant decrease in sales, difficulty in meeting payment obligations, or any indication that the business may be insolvent. By seeking advice early, the business may have more options available to it and be better able to avoid formal insolvency procedures.

What are the consequences of failing to seek insolvency advice for a funeral plan business?

Failing to seek insolvency advice can result in serious consequences for a funeral plan business. If the business continues to trade while insolvent, the directors may become personally liable for the company's debts and could face legal action. Furthermore, creditors may also initiate legal proceedings against the business, potentially resulting in the closure of the business and the loss of jobs for its employees.

Need help to close your funeral plans business

If your funeral plan business has failed to achieve FCA accreditation, it is important to seek insolvency advice to ensure that the business is closed down in a responsible and orderly manner. The FCA’s rules and requirements are designed to protect consumers and failing to comply with them can result in significant consequences, including fines and reputational damage.

By seeking insolvency advice, you can ensure that you comply with your legal obligations, protect your interests, and minimise the risks of personal liability.

Contact one of our insolvency practitioner today to discuss your options and find the best way to close your business.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.