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Furious customers of funeral home Safe Hands, which went bankrupt in March, are facing thousands of pounds extra if they thought they had already paid for their funeral.
About 46,000 people had paid the company up to £4,195 to make sure their loved ones wouldn’t get bills when they died.
When Safe Hands collapsed into administration earlier this year, rival provider Dignity promised to “protect” the group’s customers from Wakefield and honor all funerals for six months.
Additional costs: Many Safe Hands customers are furious at the thought of having to pay up to £2,625 for another funeral plan
So far, it has covered the cost of 481 Safe Hands funerals, but as of next month, this scheme will stop. Dignity and Co-op have now written to those affected and offered discounted exclusive subscriptions. But many customers are outraged at the thought of having to pay up to £2,625 for another plan.
Some say they just can’t afford it – and the prospect of having no funeral savings at all and a Safe Hands refund that could be less than £200.
Audrey, 84, and Edward Haxell, 86, paid a total of £6,350 for their Safe Hands plans. The couple, who ran a bakery together, were determined not to burden their six children with high funeral costs if they died.
And when they saw TV ads for Safe Hands in 2019, they decided to sign up.
But now, under Dignity’s discount scheme, they would have to pay another £3,888.
With a joint pension income of just £800 a month, the couple have decided to have cremations instead, which are cheaper than funerals.
But while Dignity offers this option for £647 per plan, the Haxells have lost faith in the sector and so their daughter Karen Dignan, 59, has instead set aside cash.
Edward, from Gosport, Hampshire, says: ‘We were betrayed by a company we entrusted with our money.
“We never thought our money wouldn’t be protected.”
Paul, 69, and Susan Robinson, 65, can’t afford another subscription, even if it’s discounted.
The couple, who live in Abingdon, Oxfordshire, closed two £3,399 plans in 2016.
Paul, a father of three, says: ‘I felt sick when I found out that we had to pay over £4,000, even though we had already paid off the first.
“We have a household income of about £1,100 a month, and I just don’t think we can afford another plan.”
Even customers who can afford to pay have told Money Mail that they are bitterly frustrated that they have to do this.
Melanie Diamond-Cavener, 55, and her husband, Steven, 66, paid £7,200 for their plans in 2017 and now have to find an extra £4,300 for replacement funerals.
The mother of two, from South Shields, says: ‘It is heartbreaking to think that we have to pay more money for the same deal.’
Former pensions minister Baroness Ros Altmann says: ‘It is completely unfair that these people who had taken precautions for the future should be in this position, especially during a crisis in the cost of living.’
Until July 29, funeral plan providers such as Safe Hands were not regulated. But when an investigation by the Financial Conduct Authority (FCA) revealed evidence of deceptive high-pressure sales tactics, new laws brought the industry under the purview of the FCA.
Collapse: About 46,000 people had paid the now bankrupt company Safe Hands up to £4,195 to ensure their loved ones wouldn’t get bills when they died
Safe Hands was one of 23 companies forced to exit the market as a result of the rule change after it withdrew its application for FCA authorization.
Described in a Westminster debate as a “Ponzi scheme,” the company did not have enough in its cash reserves to fully repay customers.
At a court hearing last summer, administrator FRP Advisory revealed it had only recovered £6 million so far, while legal bills had risen to £1 million.
If the remaining £5 million were split among all customers, they would receive on average just £108.
Dignity has five plans on offer to Safe Hands customers, while Co-op has a choice of three, the most expensive being £2,265.
James Daley, of consumer group Fairer Finance, believes these companies should offer cheaper options. He says, “Dignity promised to protect Safe Hands customers and I just don’t think these offers are good enough.
“While no one expects the plans to be offered for free, families shouldn’t have to pay thousands of pounds extra if they’ve already paid for their funeral.”
Subscription holders who have partially paid for their subscription by credit card are entitled to a full refund from their card provider through the Section 75 consumer laws, including any direct debits.
Any payments with debit card can also be reclaimed via banks by means of so-called chargeback.
However, this does not apply to any subsequent payments by direct debit.
Kate Davidson, CEO of Dignity, said, “Our offerings to Safe Hands customers are provided at cost, and Dignity will not make a profit.”
A Co-op spokesperson said: “We have taken the lead in this dire, unprecedented situation and have been able to propose a range of options that would offer a significantly reduced funeral plan to those affected.”
Ned Ailyan, partner at FRP and co-manager of Safe Hands Plans Ltd, said: ‘We will continue to fulfill our responsibilities in recovering assets through administration and given the size and complexity of this case, this will take some time.’
f.parker@dailymail.co.uk
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