Funeral director Julian Walker gives an Independent's view of pre-need regulation, during the ongoing Financial Conduct Authority consultation.
Malcolm Flanders [00:00:04] Welcome to the Partnership Podcast. We're in the middle of a six week consultation period with the Financial Conduct Authority, which will help decide the final shape of regulation for funeral plan providers and those they work with, including independent funeral directors. So this time I'm speaking to a funeral director about how the consultation impacts independent businesses, and what funeral planning will look like when it comes into force next year. A.B. Walker is an independent funeral director in Berkshire, which has been family run for over 150 years. Many of you will recognize its director, Julian Walker, as a past SAIF Charter Chair. Today, we will be asking him what FCA regulation means to him and the steps he has already taken to meet it head on. So, Julian, delighted to see you again. How are you, sir?
Julian Walker [00:01:00] Very well, thanks, Malcolm. Yeah, excellent.
Malcolm Flanders [00:01:02] Good. You're looking well, all things considered.
Julian Walker [00:01:05] I've been out on my bike a little bit, and I've also tackled the biscuits in the lockdown. So there's a bit of a balance to be had.
Malcolm Flanders [00:01:12] Yeah, me and you too. Well done. OK, look, I guess we've all been working hard to distill the FCA's 355 pages into its most fundamentally important points. Now, how well would you say you understand what the regulator is proposing?
Julian Walker [00:01:30] I think I've got a good grasp of this. I mean, I think the first thing to put in my mind is, after the year we've had, I feel that funeral directors are capable of dealing with a little bit of regulation. And nothing will ever be as difficult as what we've gone through in the last year. All the way through my service with Golden Charter on the board, there was to talk about regulation coming, not if, but when. And I'm almost glad that we can sort of see what's going to come over the horizon a little bit more, now, in terms of what it will mean to us.
Julian Walker [00:02:04] The actual principle of the regulation is to protect customers, and in my view, the values of the independent film director, the values of Golden Charter, certainly the values of our business, it is about doing what's right for the customer, because that creates the long term success, because customers come back. They're only really pointing this out in a structured way, in many respects. So I'm quite keen that we all understand, it's not to be feared. I think the detail is in the 300 plus pages, and it is a case of going through. I was really glad that Golden Charter did a sort of four pager, which gave me a good cut down version.
Malcolm Flanders [00:02:47] Good, alright, thanks, Julian. So I mean, how do these FCA plans actually fit with your expectations then? Because to some extent we knew what the regulator would focus on and that it would be led by consumer protection, as you've already mentioned. Did those proposals in the consultation document match your expectations or were there actually any surprises?
Julian Walker [00:03:08] They did, really. I think that there's been calls over the years for a capping, or reduction, or a banning of commissions to third parties. And I think for funeral directors, there was always frustration in terms of payments that were being taken out of the value of the funeral. So it just needs to be thought about and how that's going to be communicated in the future, because simply banning commissions, which is what they're proposing, there needs to be another model, because we all know that there will be a need to take value out of the consumer price, in order to be able to sustain the ability to pay for people to sell plans.
Julian Walker [00:03:46] I think that the appointed representative model, that sort of makes sense to me. The whole point that Golden Charter will take the heavy lifting, from our point of view, and we will act within the rules as their agents effectively. I think that really works quite well. And the stuff that they're requesting, to prove solvency and do some limited tests about us as a business, that's going to be relatively easy, relatively cheap. So it's nothing like the CMA requirements that I think funeral directors are looking at.
Julian Walker [00:04:23] And the only thing we'll need to think about more is, how do we have these appointed people within our organisation who are the ones who lead the planning discussions? Because I just want to make sure that we still leverage those great relationships that we have where the funeral administrator, funeral arranger has developed a relationship with a family and is the trusted face of A.B. Walker, or the funeral director. So we just need to think about how we do that.
Julian Walker [00:04:50] That's in context with our particular business, where we chose to have a specialist sales team, funeral plan sales team, who then, we hit covid, and we ultimately made them redundant, because they couldn't have those face to face arrangements. And it's whether we go back into that model again and if so, what will the learnings be in line with the need for regulation?
Malcolm Flanders [00:05:16] OK, thank you, Julian. Now, six weeks is quite a short consultation period, and this is the clearest indication we have had of what regulation will look like. What are your early thoughts on how you want your business to respond then? You've just touched on the, sort of, AR model a little bit.
Julian Walker [00:05:33] Being lazy, most funeral directors, I think, don't want to know too much about the 355 pages of the proposals. So we are looking, I think, to Golden Charter, SAIF Charter to take the heavy lifting in terms of identifying what the best models are going to be for our particular set up, and that's all independent funeral directors, and work to be able to promote within the FCA anything which is... I don't think we can fight it. I think what we've got to do is work with the FCA, because ultimatley it's about customer care. Ultimately, then we should be leading it rather than fighting it.
Julian Walker [00:06:19] There are going to be points where I think funeral directors should get involved. And I think that there is an opportunity now to start to do those bits of writing in to either, the Saif Charter guys, or SAIF, or Golden Charter, or directly to the FCA just to get some points across. But I think that my learnings from the approach that the industry has, the CMA, was that were too many people trying to prevent transparency rather than actually open up our situation, and become a little bit more transparent. So with funeral plans, I think we should become more aligned rather than fight to become less aligned.
Julian Walker [00:07:04] We've got to accept that are going to be other funeral plan providers, and many of my friends in SAIF sell or they accept other funeral plan types. So my selfish view is that I would promote that there was a Golden Charter arrangement with businesses which are prepared to align themselves with Golden Charter, and we don't defend the behavior of other funeral plan providers, or end up being tainted by them, because I fear that there is going to be a few that will not survive regulation and they will go down fighting.
Malcolm Flanders [00:07:45] Just on the last point generally about funeral plans, I'm guessing that notwithstanding what you've read in terms of the regulation, it hasn't diminished your business appetite for funeral plans going forward?
Julian Walker [00:07:56] Oh, no, certainly not. Actually, I remember sitting at the end of February and realizing how many funeral plans we'd sold, which was, you know, you can get them on two hands, and how many funeral plans that matured. It was an incredible number. And so there was a large number of people that have had funeral plans that are no longer in our plan bank. And we know that there's an increased awareness and conversation to be had with our customer base about making provision for the end of life.
Julian Walker [00:08:27] So I think that we've probably got an opportunity, and it's more valid now than it was a year ago, because funeral directors, and dying, and the end of life, and having a plan for different things, is now becoming more common. I think that Covid has brought that to us and we can have that trustee conversation.
Malcolm Flanders [00:08:48] Yeah. Thank you, Julian. That's actually backed up by the consumer research we've carried out over the last 12 months, that those plans remain important and people are indeed thinking about their own mortality as a result the pandemic. Thank you. OK, look at Golden Charter, the simple fact that how we work is that we need to support independent funeral directors, like yourself, to work within these rules. So what support do you feel you need or want from us specifically?
Julian Walker [00:09:14] This may be unique to A.B. Walker, but I suspect not. Every different funeral arranger approaches the funeral arrangement process slightly differently. And what we can't have is every different funeral arranger approaching the funeral plan arrangements differently, because we're now required to fulfill the process the same way each time. So we can't afford to have a variety of approaches.
Julian Walker [00:09:43] Much as I know frustrates a lot of funeral directors, and I probably am not one because I've worked within Golden Charter in a very close way and I see how it works a little bit more, that there has to be trust. That Golden Charter's arrangement, in terms of the contracted service agreement that we've got, if you like, it might seem as though it's a bit harsh, but actually its principle is to protect all from the likelihood that a funeral arranger at A.B. Walker, in the Maidenhead office, is going to go off and get us all into trouble because they've offered something which they shouldn't do.
Julian Walker [00:10:21] So if there was something that I would like, that we can have in the future, it would be more training, more training resources, video, digital training, that we can get everybody to sit through. There's a test at the end. There's a there's a pass mark, then to have to keep redoing it. I think it just means that we have that level of compliance and understanding that you have to do things a certain way and there's no other way. And that way we don't run into a problem where we get misselling of any kind.
Malcolm Flanders [00:10:54] No, I get it, understand. Thank you for that. Now, look, you have, of course, signed your Golden Charter funeral director agreement recently, which we set up as a key step on the road to regulation. How have you found that agreement? And do you think it is a good stepping stone to what the FCA looks like it requires going forward? And are there any aspects that concern you?
Julian Walker [00:11:15] No, I mean, Golden Charter have the disadvantage of almost being the first mover to try and get funeral directors in line, behind a particular agreement. And so, there were a few conversations that I had with funeral directors, where they were frustrated because they felt it was imbalanced towards the control of Golden Charter. But I understand that if Golden Charter doesn't have that control, because it's taking the risk with the regulator, it is liable. So it's got to be seen to be making people adhere to rules.
Julian Walker [00:11:50] I personally don't feel as though it's an onerous thing. I think initially I was looking at where the tensions might have lain, and they ended up being explained better in an alliteration, which the language was a little bit different from. And that was towards the value of funeral plans moving forwards. To make sure that, should the next generation A.B. Walker, or I wish to dispose of the business, there would be value left in the plans that we've sold, and also there's quite a lot of costs associated with selling those plans, which we don't actually see until the plan is matured. So, that was probably an area of tension which was easily removed.
Malcolm Flanders [00:12:36] OK, thank you. Finally, when it comes to regulation, what advice would you give your fellow funeral director colleagues who are listening to this podcast across the country?
Julian Walker [00:12:48] Well, firstly, I don't think we need to be frightened of it. I think we need to embrace it. No one likes change, but we are going to have to change one way or the other. And I think Covid has taught our industry that we can change on a sixpence. And so I think we need to embrace it. I think we need to allow the discussions to go ahead, and others will take the lead in negotiating the best place for us, I believe. And I think that we will then be given a serious, new model, enough time to implement the changes, and then we'll move forward and sell more funeral plans.
Julian Walker [00:13:30] There is no other way of going into it. We cannot fight it and there is no other mechanism by which people can set aside money for a funeral, that we are as in control of, and in terms of defining that money is coming towards us for a funeral in the future. So there's no other investment format that I think would take place.
Malcolm Flanders [00:13:53] Excellent. Julian, thank you very much. Really appreciate your time this afternoon.
Malcolm Flanders [00:14:03] Thank you for listening to the partnership podcast, the FCA consultation period ends on April 13th, so there is still time to participate. You can also speak to your Golden Charter Business Manager, if you want your thoughts to influence our own response. You can find all our podcast episodes on goldencharter.buzzsprout.com, including interviews with funeral director inspectors and the Funeral Planning Authority's CEO. And if you have any thoughts about the podcast, you can reach me on malcolm.flanders@goldencharter.co.uk. Thanks again and I'll talk to you again on the Partnership Podcast.