Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2020

Lord Davies of Brixton Excerpts

Wednesday 6th January 2021 Grand Committee

[Lord Davies of Brixton (Lab) [V]]

My Lords, this is a no-brainer. Funeral plans are clearly a form of life insurance and, just like mainstream life insurance, they should be subject to full regulation. Promises are made to policyholders and we, as legislators, have an obligation to ensure that those promises are met.

We also have a duty of care. Funeral plans are mainly used by people on low incomes and with limited savings. Gold-standard independent financial advice will never be available to these prospective policyholders. They are inevitably on their own in an area that is potentially costly to them and where they have little knowledge, so regulations are required. I support what is proposed here today.

Provisions are required to provide protection for those who worry about being given a pauper’s funeral or concerned about it being a burden on their family after their death. However, the Committee needs assurance on some issues. I assume that there will be a time limit—maybe not now—but, given the time, I will limit myself to just two points.

First, we need assurance that the involvement of the FCA will not result in an inappropriate regime of supervision that would work against policyholders’ interests by unnecessarily increasing costs and limiting choice. The Minister was right to mention the work of the Funeral Planning Authority. It is a shame, therefore, that the Treasury does not appear to have made full use of its experience and expertise in this area. No doubt the Minister is aware of the detailed criticisms it has made of these proposals. I understand that a meeting with the authority is proposed but will the Minister assure us that the Treasury, and in due course the FCA itself, will take appropriate advantage of its undoubted expertise?

Secondly, it is important to mention the special needs of those religious communities—Jewish, Muslim and evangelical Christian—that provide funeral support for members of their own congregations. Such arrangements generally include a type of funeral plan that could fall under the order. I do not suggest that these plans should be disregarded for the purposes of the order. However, these arrangements are culturally significant, so will the Minister assure these communities that appropriate consideration will be given during the consultation to their special nature, both by the Treasury and by the FCA?