Customers who lost money to collapsed funeral firm Safe Hands have been told they will lose most of their cash.
Safe Hands sold pre-pay funeral plans, mainly to elderly people, but collapsed into administration in March - leaving around 45,000 customers high and dry.
The devastated pensioners, who thought they had bought peace of mind for their relatives when they passed away, not face the complete opposite, as they have lost their funeral as well as the money they paid.
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Pre-pay funeral plans allow people to pay off the cost of their funeral or cremation in instalments, and Safe Hands customers paid £3,000 on average for a funeral plan.
However they have now been told by the administrators dealing with the collapsed company's assets to expect no more than £300 to £600 back and to seek a new plan with another company.
A report by administrators FRP said that there is probably not enough cash in the business to repay everyone, and unfortunately, customers who lost money are last in line when it comes to getting any cash back.
The report said: "The administrators currently estimate that the total sum that will be recovered for plan holders from the trust assets will be between £10.6million and £16.1million (net of costs), compared to estimated claims against the trust of £71.13million.
"This equates to a return of between 10p and 20 pence in the pound. Plan holders will rank as unsecured creditors against the company for any deficiency from trust asset realisations."
Safe Hands customer Tom Pringle, 86, of Castletown, Sunderland, and his late wife, Bessie, took out plans in 2017, when Bessie was diagnosed with dementia. Ex-miner Tom said that he and Bessie had paid a total of £7,190 to cover both their funerals, and thought the investment would take their pressure off their son and daughter when the time came.
Bessie sadly died on October 3 2021, so Tom was able to claim on the policy for her funeral, but he says the uncertainty of what has happened to the money for his funeral is causing him a lot of worry.
"I don't know if I should take out a plan with another company or if I should wait to see if I will get anything back from Safe Hands," he said. "The irony is that all over the plan is the statement 'You'll always be in Safe Hands,' when as it turns out, that couldn't be further from the truth."
Another affected customer is Jean, of Winlaton, who doesn't want to use her real name, who took out a Safe Hands plan with her husband after she lost her job due to ill health eight years ago.
"After that I persuaded my husband that it would be a good idea to make our funeral arrangements while we were still able, as we are both over 60 and in ill-health," said Jean. "Unfortunately, he then became ill about two years ago and eventually ended up losing his job last year.
"He doesn't qualify for ESA, so money is very tight here, but we at least thought that as our funerals had been paid for and there wouldn't be a drastic financial issue if the worse came to the worst. We are both extremely worried as we are struggling enough to pay our normal bills and do not have any further spare funds to help us if anything happens."
Jean's concerns were shared by another reader Susan, from South Shields, who said: "Safe Hands liquidation has caused immense distress for myself and my husband as we both have separate funeral plans with the company. We are aged 65 and 68 and are both retired and losing this amount of money is shattering to us."
Safe Hands has not given a reason for its collapse other than financial trouble. A statement on the Safe Hands website said: "The appointment of the joint administrators was made by the directors of the company, after a period of severe financial challenge, which has left the business unsustainable in its current form."
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The collapse of Safe Hands comes after the Financial Conduct Authority (FCA) said it would start regulating firms that provide and arrange prepaid funeral plans from July 29 2022. If a funeral plan provider does not meet the requirements set by the FCA, they will no longer be allowed to sell plans or carry out funerals after that date. Safe Hands had applied for FCA authorisation - but withdraw this in February.
The pre-pay funeral plans market is currently not regulated. This means there is no watchdog regulating the market, and if a firm goes bust, consumers are not guaranteed any money back.
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