CP21/4: Funeral plans: proposed approach to regulation
The FCA will regulate the sale and administration of pre-paid funeral plans from July 2022 and have today published a Consultation Paper which sets out their draft rules and approach to regulation. This does not mean that the recommended actions are carved in stone, but in our experience, 95% are unlikely to change.
- firms that sell or carry out funeral plan contracts for funerals in the UK
- investment advisers who provide advice on funeral plan contracts
- insurance firms who provide life insurance policies that back some funeral plans
- trustees of trusts and discretionary investment managers which manage the assets of trusts that back some funeral plans
- trade bodies representing firms that carry out or sell funeral plan contracts, including those representing funeral directors
- groups representing consumer interests
- consumers that have a funeral plan, or are thinking of purchasing one
From 29 July 2022, activities involving the provision and distribution of pre-paid funeral plans will come under FCA regulation, and firms conducting these activities will need to be authorised by them.
July 2022 is 15 months away, why do I need to act now?
If you fail to get authorisation by 29th July 2022, you will have to cease trading in Funeral Plans.
- All funeral plan providers that wish to continue doing so, will need to apply to the FCA
- Firms that sell funeral plans (and do not provide or administer them) can apply for direct FCA authorisation as an intermediary or become an Appointed Representative (AR) of a principal firm. The principal is responsible for the conduct of the AR. The Principal firm is required to notify the FCA in advance if they intend to appoint ARs
- The authorisations gateway for applications is planned to open in September 2021 and firms need to ensure they are authorised before the regulation takes effect on 29 July 2022
- Applications for authorisation and supporting documentation should be submitted as soon as possible after the FCA opens the applications gateway. If not submitted as soon as possible firms may not have sufficient time to demonstrate they meet the Threshold Conditions before the rules take effect on 29 July 2022
- Firms currently trading that submit their applications after 1 November 2021, may incur a late application fee. Note: paying a late application fee does not guarantee that an application will be approved or determined before July 2022
- When submitting an application, all firms need to demonstrate how they meet the minimum standards, known as Threshold Conditions, both at the time of authorisation and on an ongoing basis. These are the minimum standards that all FCA regulated firms must meet, to be able to undertake the regulated activities they want to carry on
- If funeral plan firms, particularly those who provide or administer funeral plans, do not intend to be authorised, they should take appropriate steps to ensure they cease regulated activities and wind down/sell their book prior to 29 July 2022. Conducting regulated activities without authorisation is a criminal offence and doing so may result in prosecution
- Funeral plan providers that are currently trading should let the FCA know if they do not intend to apply for authorisation
- AR notifications should be submitted after the principal firm is authorised.
We have been enabling FCA authorisation Applications since 2008 and have a wealth of experience in this field for all manner of firms from Banks to Wealth Managers, Claims Management Companies to Stockbrokers and many more!
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The requirements for your firm to apply for FCA Authorisation requires a package of documents compiled in a way that the regulator expects. The contents are not proscribed so much as expected. The jargon used, needs to be acceptable to regulator-speak as the FCA admit in the handbook “… uses words and phrases that have specific meanings in the Handbook or in legislation; these may be different from, or more precise than, their usual dictionary meanings.”
- Regulatory business plan (this is a specialised area – we can help!)
- Wind-down plan (this is a specialised area – we can help!)
- Vulnerable customer policy(this is a specialised area – we can help!)
- Complaints handling policies comprising the below (this is a specialised area – we can help!):
- Compliance monitoring procedures comprising the below (this is a specialised area – we can help!):
- Financial projections comprising the below:
- Latest annual accounts (if already trading)
- Up-to-date management accounts (if already trading and year-end date for most recent annual accounts is greater than 12 months)
- Companies House form (SH01) (if applicable and firm has already capitalised)
- Details of source of funding (if firm is not a limited company, sole trader or partnership)
- Details of subordinated loans (if applicable)
- Details of other external funding (if applicable)
- Detailed IT controls form (if applicable)
- Evidence of the firm’s registration with the Information Commissioner’s Office
- Staff organisation structure chart (if applicable)
- Controller forms
- Controller and close link structure chart (if applicable)