The Financial Conduct Authority's requirements are becoming clear. Golden Charter's Head of Regulatory Compliance explains what regulatory approach is appropriate for funeral directors and what the plan provider is doing now.
Malcolm Flanders [00:00:04] Welcome to the Partnership Podcast. Our first ever episode, two and a half years ago, talked about regulation, and it's been a constant feature ever since. With guests like Fairer Finance and Scotland's inspectors of funeral directors keeping us up to date. Regulation became a reality recently, with many of you working through the Competition and Market Authority's requirements for price transparency on your at-need services. Hot on its heels is the Financial Conduct Authority's regulation of funeral plans. Its rulebook has been issued, and at Golden Charter we have just applied for authorisation as the market will become regulated in July of next year.
Malcolm Flanders [00:00:42] What providers like us have to do for the FCA is very different from the options open to independent funeral directors. So today we'll be talking through those options and what you should know ahead of joining a regulated market next year. We'll be hearing from our head of regulatory compliance, Mairi Rodger, and I hope our conversation will help reassure you of the path to take and how we will support you along the way. The timetable means you don't have to take an immediate action, but Mairi will outline what you need to know ahead of taking the next steps.
Malcolm Flanders [00:01:14] So, Mairi, nice to have you with us, how are you?
Mairi Rodger [00:01:17] Hello, Malcolm. Yes, I'm well, thank you. How are you?
Malcolm Flanders [00:01:20] I'm OK. Not bad, all things considered. Thanks for joining us. So let's start by stepping back and reflecting for a moment on how we reach this stage. What were the reasons behind pre-need regulation, and how has it taken the shape it's in today?
Mairi Rodger [00:01:39] So we operate today in a sector which is self-regulated, and it's voluntary whether providers sign up to abide by the Funeral Planning Authority rules and codes of practice. Therefore, it doesn't provide a level playing field for customers or businesses. A move to statutory regulation was consulted on by the Treasury, and the outcome was that the Financial Conduct Authority should assume responsibility as the regulator of funeral plans from the 29th of July next year, to ensure standards are as high as possible within the funeral party industry.
Mairi Rodger [00:02:12] We expect FCA regulation to provide a greater level of transparency and protection for customers, and drive out bad practise by plan providers in the marketplace. Crucially, it should, in future, force all providers to match the standards of the reputable, professional funeral plan providers and the funeral directors they work with. The focus is on ensuring businesses who sell funeral plans do this in a way that meets customers needs and that consumers' money is properly looked after and used to deliver funeral services as they would expect. But for most independent funeral directors partners, the changes are a continuation of their regulatory journey, and will complement the well established principles of looking after families they already have in place.
Malcolm Flanders [00:02:59] Great. OK, thanks Mairi, I get it. So it really is about the customer. OK, now look, we always emphasise that the customers the beneficiary of regulation and that it needs to support families. Can you see those benefits in the FCA plans? In what ways do they better protect customers or change the customer experience?
Mairi Rodger [00:03:19] Yes, as founder members of the Funeral Planning Authority, putting customers at the heart of what we do is not a new concept for us, or the funeral directors we work with. Our customers will see very little change, but hopefully they will receive greater comfort knowing that the sector as a whole will be governed by an established regulator, and that can only be good for customers and their families.
Mairi Rodger [00:03:41] It's really important funeral directors continue to provide reassurance to customers as to the personal nature of the care they will provide at time of need. This means that they can continue to promote their brand and valued services locally as they do today. Whilst there will be some changes to documentation customers will receive before, during and, after the purchase a funeral plan, much of the customer's experience will remain the same. Funeral directors will continue to understand customers needs, and complete an application form with them as they do today.
Malcolm Flanders [00:04:14] Thank you, Murray. So let me put myself in the shoes of a funeral director then. From the funeral director's perspective, what would you say is the single biggest difference they will experience going forward?
Mairi Rodger [00:04:27] Hopefully, it will become easier for everyone. We're committed to minimising the impact to funeral directors. The sale of funeral plans is secondary to meeting the immediate needs of dealing with bereaved families. And that will remain the case. However, there are some differences for funeral directors, and I'll summarise the three biggest differences that I think will affect them.
Mairi Rodger [00:04:50] The first one is how the sell funeral plans. Becoming an appointed representative of Golden Charter will allow funeral directors to continue arrangements with customers, much as they do just now. It will also mean they maintain the partnership they have with us, and we will take them through the steps involved in this shortly. This will includes how they can apply, and what documentation the FCA will expect plan providers to check.
Mairi Rodger [00:05:17] Secondly, how we monitor the quality of funeral plans. Our business managers will continue to work closely with funeral directors and let them know when it's time to apply to become an appointed representative. Our business managers already have conversations with funeral directors on how we monitor the quality of funeral plans submitted to us, and this will continue.
Mairi Rodger [00:05:39] And lastly, conversations with customers. We will provide a fully supported sales process, so funeral directors can continue to capture their understanding of customers' needs. We already provide pre-sales literature, and we will be adding to this by introducing a short document which explains the funeral directors relationship with us, and also a summary of the funeral plan the customer is interested in purchasing, prior to committing to it.
Mairi Rodger [00:06:07] Great thanks Mairi, I get that. So effectively, if you're going to become an appointed representative of Golden Charter, it means you can continue those conversations direct with your customers and families, I understand. OK, so now let's look at it as a plan provider. Can you talk through what the main obligations are on providers like ourselves, Golden Charter?
Mairi Rodger [00:06:27] Yes, and that's a key point, because unless funeral directors elect to become directly authorised, most of the obligations fall directly on the shoulders of the planning company. The FCA intends reduce the potential for harm to any customer purchasing a funeral plan. From the moment of their first enquiry, to the conclusion of the funeral itself. So the provider's obligations span across the entire life of the plan.
Mairi Rodger [00:06:54] We have applied to the FCA, as you mentioned, Malcolm, as a funeral plan provider who will be directly authorised and supervised by the FCA. And this is to ensure we can continue to administer and sell plans after the 29th of July next year. We have to take responsibility for promoting and selling our funeral plans, to ensure all customers receive the benefits of the plan they purchased. This includes all the information given to customers when deciding whether a funeral plan is right for them, the sales process, after sales documentation, and complaint handling, right through to ensuring there is sufficient funds available to deliver the funeral.
Mairi Rodger [00:07:36] Got it. Thanks, Mairi. Now let's just focus on the appointed representative model for a moment. So we've heard actually from the FCA that they expect the appointed representative model to be the one that works for most independents. So how will this approach work, and what are we doing here at Golden Charter to help the funeral directors who move to this way of working?
Mairi Rodger [00:07:59] Becoming an appointed representative is the closest option to how funeral directors engage with families at the moment, and provides, in our view, the best outcome for customers. Becoming an appointed representative is far less demanding of a funeral director than becoming directly authorised by the FCA. We believe the appointed representative option will be the preference of most independent funeral directors, and be the best route for a customer to purchase a funeral plan, as all our research tells us that customers want to talk to funeral director first.
Mairi Rodger [00:08:33] We'll build on our existing support to provide a range of resources and training, to make it easy for our funeral directors to demonstrate a consistent level of understanding of the regulatory requirements. The monitoring requirements that go along with this will not entirely be new to funeral directors. This is already a familiar process for funeral directors that work with us. Our business managers cover, in their regular engagement with funeral directors, what we currently do to monitor the quality of plan sales.
Mairi Rodger [00:09:04] The FCA expects funeral plan providers to supervise and monitor its appointed representatives, and to be able to demonstrate the good practice that's in place. This will include the information funeral directors provide when they speak to customers during funeral plans sales, cancellation requests and handling of any complaints, the provision and completion of training to meet competent standards, keeping us up to date when certain events happen in their business, including when key people leave or join their business, regular meetings and discussions to ensure we're working together effectively to deliver a customer focused outcomes. And, most importantly, continue to understand the needs of customers.
Mairi Rodger [00:09:49] We have to provide customers with complete information early in the enquiry process before the decision to purchase a plan is made. Therefore, we're updating application forms and supporting literature to guide funeral directors and customers. This includes providing information which explains that they're acting as an appointed representative of Golden Charter. This information is necessary with details of the funeral plan itself so the customer can make an informed choice.
Mairi Rodger [00:10:16] The FCA requires appointed representatives to clearly explain what is included in the plan, and what is not, to set the customer's expectations of what the funeral plan will deliver, and we will provide funeral directors with access to a suite of regulation ready marketing materials and literature to support them with this.
Malcolm Flanders [00:10:36] Wow. Fantastic. Thank you, Mairi. That was very, very helpful. Now I've actually got one final question for you. So all our funeral directors are just coming out of the back of CMA regulation, as far as that need services. So in terms of FCA regulation, and what we're doing to help them, should they worry about this, or have we got this in hand?
Mairi Rodger [00:11:01] We've absolutely got this in hands, and they can rely on us to support them in this journey. We've been preparing for FCA regulation for a number of years now, so this hasn't taken us by surprise. So it's something that we have been working on for a number of years, as I say, and we are producing all the materials and support that we think funeral directors will need from us, to help make this a simple process as possible.
Malcolm Flanders [00:11:31] Great answer. Thank you, Mairi, and thank you once again for your time today on this podcast. Appreciate it.
Mairi Rodger [00:11:38] Thank you.
Malcolm Flanders [00:11:44] Thank you for listening to the Partnership Podcast. Regulation is a big subject, so today's episode is the first in a series of regular podcasts following the progress of regulation. We'll be hearing from other funeral directors as well into what the FCA plans will mean for them, as well as the rest of us. You can listen to all our previous episodes covering regulation and much more at goldencharter.buzzsprout.com, and contact me if you have anything to contribute or request at firstname.lastname@example.org. That's it for now, I'll talk to you next time on the Partnership Podcast.