Thousands of pensioners have been left wondering what to do next after Safe Hands, a pre-pay funeral provider, went into administration earlier this year.
And now the UK's financial regulator has issued a warning not to buy pre-paid funeral plans from two other companies amid plans to regulate the sector this summer.
A notice on the Financial Service Authority's website reads: "We strongly advise that you do not buy a plan from these firms. We have been clear for some time that people should avoid buying new plans from funeral plan providers that have not applied for authorisation or had their application withdrawn or refused. We are repeating this guidance and strongly advise that you do not buy a plan from Empathy (Empathy Funeral Plans UK Limited) or Unique (Fox Milton & Co Limited, trading as Unique Funeral Plans)."
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The collapse of Safe Hands comes after the FCA said it would start regulating firms that provide and arrange prepaid funeral plans from July 29. This means 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.
The FCA has published a list detailing which firms have withdrawn their applications to be authorised or been refused them, those yet to apply for authorisation, as well as those that are transferring their customers to other providers. If your funeral plan is with one of these companies, the FCA is advising you get in touch with your current provider for more information.
The note on the FCA website says: "We advise that you do not buy a new funeral plan from these providers. If you have an existing plan with them, and haven’t heard from them, get in touch with your provider as soon as possible. Existing plan holders can ask for their plan to be cancelled and request a refund of any money paid into the plan. However, customers should be aware there may be a cancellation fee and should check the terms and conditions of their contract with the firm.
"Anyone considering a funeral plan should only use a provider who has applied for FCA authorisation as set out on our website." Around 45,000 customers who lost money to collapsed funeral firm Safe Hands have been told they will lose most of their cash after the firm collapsed into administration in March.
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.
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.
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 had applied for FCA authorisation - but withdrew this in February.
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Safe Hands has said that no further direct debit or standing order instalments will be collected and all contracts are considered cancelled. But customers should still cancel their direct debit or standing order with immediate effect. If you’re called by someone claiming to be from Safe Hands Plans, FRP Advisory or any other company claiming to be involved in the administration, don't give out any information, as it could be a scam. Instead, hang up and call the freephone helpline of the administrators (Monday to Friday 9am-5pm) on 0800 640 9928, or email safehands@frpadvisory.com.
Unfortunately, you’ll have no protection from the Financial Service Compensation Scheme (FSCS) if your funeral plan provider goes into administration before July 29, or if it has its FCA application refused, so it may be best to wait until on or after July 29, as firms will be required to meet higher standards from this point once regulated by the FCA.
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