The Financial Services Compensation Scheme (FSCS) does not provide protection for individuals who have a funeral plan with a provider that fails. This applies whether you have purchased your plan by paying a lump sum or by paying a monthly amount to a funeral plan provider.
Whilst funeral plan providers can be regulated by the Financial Conduct Authority (FCA) the vast majority choose to use exemptions available to them which means they are not. Even if a regulated funeral plan provider were to sell you a funeral plan this would not be covered by the FSCS because these products are not categorised as a ‘designated investment’ under FSCS’s compensation rules.
Funeral plan providers rely on insurance companies and investment trusts to meet their obligations to you. In some limited circumstances where the provider of a Whole of Life insurance policy or provider of a product held within a trust goes bust, FSCS may be able to pay compensation to the provider of your funeral plan or the trustees. It would then be for the funeral plan provider or the trustees of the investment fund to decide what to do with any monies that are paid out as a result. Having paid compensation, the FSCS is not responsible for the decisions that funeral plan providers or investment fund trustees may make. It is unlikely that FSCS would be able to pay compensation directly to you.
If you have any questions about your funeral plan we would suggest you contact your provider in the first instance or the Funeral Planning Authority, the self-regulatory body for the vast majority of the funeral planning industry, for further guidance.