Is your funeral plan provider on the FCA blacklist?

Tens of thousands of elderly people face losing vast sums of money after nearly two dozen funeral plan firms were banned from operating last week.

And today Money Mail can reveal one law firm is already attempting to cash in on the crisis by touting for mis-selling claims.

The company claims it can help customers with unscrupulous providers to win compensation. But it may pocket as much as 40 per cent of any payout, and the City watchdog is urging people to be on their guard.

Funeral plans typically cost between £3,000 and £4,000 and offer peace of mind to customers who do not want their loved ones to be hit with large bills when they die.

The industry was previously unregulated, offering those who bought plans little protection if something went wrong.

However, as of last Friday, firms must now pass strict checks set by the Financial Conduct Authority (FCA). They have also been banned from cold-calling potential customers.

Anyone looking to buy a plan is now being urged to check that the provider is on the regulator’s list of authorised companies.

Some 26 firms have been approved — covering more than 87 per cent of an estimated 1.85 million plans sold. But 23 either did not apply for authorisation or failed to meet the new rules. They include a string of companies that has gone bust in recent months — including Safe Hands, which had about 46,000 customers.

Those affected are still waiting to find out if they will get any of their money back. And many are among those being targeted by solicitors working for a Manchester-based firm called Barings Law.

The company has been promoting itself on Facebook and says it can help people claim against mis-sold policies. One ad includes a message photoshopped on a headstone that says: ‘If your funeral provider is in this list, you need to take action immediately.’

It then invites would-be claimants to ‘learn more’ by submitting a ‘ten-second form’.

A spokesman for Barings Law was vague about how it would prove a historic mis-selling case. He says claims would ‘generally centre around whether the firms are able to supply the plans they sell’.

‘There are other reasons why a plan can be mis-sold, for instance if the first point of contact was via cold-calling, or if undisclosed commissions or fees are paid to a third-party intermediary with- out the customer’s knowledge,’ he adds.

But while Barings says claims will be on a no-win, no-fee basis, funeral-plan holders have told Money Mail they face losing up to 40 per cent of any payout to fees.

A spokesman says charges will depend on ‘the route taken to see a claim through to its conclusion’. 

Solicitor Gary Rycroft, of Joseph A. Jones & Co, says: ‘The new rules and requirement for regulation are not retrospective so my worry is the blitz of advertising, including that by Barings Law, may give false hope and therefore be potentially exploitative to people who have been mis-sold in the past.’

Those affected are still waiting to find out if they will get any of their money back

In good news for plan holders, the Financial Ombudsman Service has now said it will consider historic complaints if the provider was a member of trade body the Funeral Planning Authority.

Mr Rycroft adds: ‘If that is the case and a consumer has a potential claim, my advice would be for them to pursue it themselves rather than share a high percentage of whatever is recovered with a law firm or claims company.’

Many surviving firms have agreed to take on the plans of those leaving the market, so you should contact your provider to find out what its plans are. And customers of some failed companies may receive a full or partial refund through administrators, once the company has been wound up.

James Daley, of consumer group Fairer Finance, suggests this may be a better route for customers who are looking for a payout.

He says: ‘It seems opportunistic on the law firms’ part. The risk is that you may end up waiting for longer and getting less than you would have got through the administrators.’

However, refunds are far from guaranteed. Earlier this year, a court heard customers of Wakefield-based Safe Hands may recoup just £108 each.

And administrators for Unique Funeral Plans have already confirmed that none of its customers will receive refunds or have their funerals honoured by the company.

Rival firm Dignity has agreed to honour funerals for Safe Hands customers until the end of October.

An FCA spokesman says: ‘We are urging consumers to be alert to anyone claiming that they will help them make a claim against a funeral-plan provider.’

A Barings spokesman disputes the accusation that it ‘gives false hope’ to customers, adding that it aims to ‘speed up’ the process.

He says: ‘We represent multiple claimants against the same provider, which is something we feel gives our clients more power and increases the chances of success.

‘We always make it clear to customers that they are able to make claims without using a law firm.’

f.parker@dailymail.co.uk