Are direct cremation plans regulated? What FCA and FSCS protection means

Written by Gill Mills

Funeral Plan Consultant at Memoria Direct Cremation

Reviewed by Shaun Geary

Funeral Plan Consultant at Memoria Direct Cremation

Yes, direct cremation plans are regulated. Since the 29th of July 2022, every provider that sells prepaid funeral plans in the UK, including direct cremation plans, has to be authorised and regulated by the Financial Conduct Authority (FCA). It’s important to know that a direct cremation arranged after someone has died is not regulated in the same way.

If you’re buying a direct cremation plan, it’s natural to have some hesitation about paying money now for something that may not be needed for many years. Especially if you’ve heard stories in the news about funeral companies going into administration and people losing thousands of pounds.

Since 2022, the rules around this subject have changed for the better, meaning your money is protected should anything happen to your provider. This guide explains who regulates direct cremation plans, how your money is protected, what happens if a company fails, and how to check a provider before you buy anything.

Key Takeaways

Yes, direct cremation plans are regulated. Since 29 July 2022, every provider selling prepaid funeral plans in the UK has to be authorised and regulated by the Financial Conduct Authority (FCA).
Your money has to be held separately from the provider’s own money, in a trust or a whole-of-life insurance policy.
If an authorised provider goes out of business, the Financial Services Compensation Scheme (FSCS) can step in. It will try to find a replacement provider to take over your plan, or eligible customers can claim compensation of up to £85,000 per person, per firm.
You can cancel. FCA rules give you at least 30 days after you buy to cancel without paying anything, and longer for some instalment plans.
Not everything is covered. A direct cremation arranged after someone has died, and funeral plans sold by some councils, aren’t covered by the FCA’s funeral plan rules.
You can check any provider on the FCA’s Financial Services Register. Memoria Direct Cremation is a trading name of Memoria Funeral Plans Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 965287).

Are direct cremation plans regulated by the FCA?

The short answer is yes. The Financial Conduct Authority (FCA) has regulated funeral plans since 2022, It’s the same body that oversees banks, pensions and insurance firms and its rules cover pre-paid direct cremation plans, as well as pre-paid attended cremations and traditional burials. That means that any company that provides funeral plans has to be authorised by the FCA and follow the rules it sets out. Anyone selling plans for a provider, such as a funeral director, has to be authorised too, or appointed by an authorised firm. It’s a criminal offence to provide funeral plans without authorisation. Providers also have to hold your plan money separately from their own, in a trust or an insurance policy. If an authorised provider goes out of business, the Financial Services Compensation Scheme (FSCS) can protect eligible customers. It’s important to know that a funeral plan isn’t a life insurance policy. You’re paying in advance for a set funeral service at today’s price, rather than buying cover that pays out a sum of money.

If you'd like to know exactly how plans work, take a look at our guide to what a direct cremation plan is.

What do the FCA rules mean for you?

The FCA sets out what providers have to do, from how they sell their plans to how they look after your money.

Every provider must be authorised. You can check this yourself on the FCA register. We explain how you can do this in this guide.
Your money has to be held separately. Plan money must be held in a trust or insurance policy, away from the company’s day-to-day money, so it’s there when it’s needed.
No cold calling. Providers aren’t allowed to cold call you to sell a funeral plan.
No commission for third parties. Providers can’t pay commission to funeral directors or other businesses that sell plans for them, so nobody’s being paid extra to push you towards a particular plan.
Plans must offer fair value. Providers have to show their plans are fair value and be clear about what’s included and what isn’t.
Clear information before you buy. You should get a plain summary of what your plan covers, what it costs and how to cancel.
You can cancel. You have at least 30 days after you buy to cancel without paying anything, and longer for some instalment plans.
You can complain. If something goes wrong, complain to the provider first. If you’re not happy with their final response, or they haven’t replied within eight weeks, you can take it to the Financial Ombudsman Service for free.

How funeral providers look after your money

When buying a direct cremation plan in advance, it’s understandable to want to know where that money goes and how it’s looked after. Under FCA rules, the money you pay for your funeral plan must be held separately from the company’s own money.

The two options are:

A trust. Your money goes into a trust fund that’s kept until it needs to be used.
A whole-of-life insurance policy. Your money is used to take out an insurance policy that pays for your cremation when it’s needed.

At Memoria Direct Cremation, your money is held in a whole-of-life insurance policy in your name, and is protected by the FSCS. You can read more about this in our guide on how your funeral plan is protected.

What happens if a funeral provider goes into administration?

If an FCA-authorised funeral plan provider goes out of business, eligible customers can be protected by the Financial Services Compensation Scheme. The FSCS is the UK’s free compensation scheme for customers of financial firms that fail.

If your funeral plan provider fails, the following happens:

A backup provider steps in. Authorised providers are expected to have arrangements in place if they fail that means another provider takes over your plan instead
If that doesn’t happen, the FSCS will step in. Where possible, the FSCS will try to find a replacement provider to take over your plan, with the same or similar terms.
You might be able to claim compensation. If you don’t wish to take the replacement plan offered, you may be able to claim compensation. This is based on what it would cost to buy the same plan today, not what you originally paid, and compensation is limited to £85,000 per eligible person, per firm.

This protection applies when an authorised provider fails on or after 29 July 2022, and covers plans bought before that date too. However, it doesn’t apply to providers that went out of business before the rules came in.

What isn’t covered by FCA rules?

While there are protections in place for pre-paid funeral plans, there are other circumstances that sound similar, but are not covered by FCA rules. It’s important to know what they are so you’re not caught out.

Arranging a direct cremation after someone has died. If you’re arranging a direct cremation for a loved one at the time of need, that isn’t regulated by the FCA. Our guide to how to arrange a direct cremation explains what to do.
Funeral plans sold by some councils. Funeral plans run by local authorities aren’t covered by the FCA’s funeral plan rules, so they may not come with FSCS or Financial Ombudsman protection.* If you’re offered a plan through your council, ask how your money is held and what protection applies.
Over-50s life insurance. These policies are regulated as insurance, not as funeral plans, so different rules apply. They pay out a fixed sum of cash rather than a funeral. Our guide to direct cremation plans vs over-50s life insurance vs saving compares the options.

How to check whether a funeral plan provider is regulated

If you’re unsure as to whether the direct cremation plan provider you’ve found is regulated, you can check on the FCA’s Financial Services Register.

Search for the company’s name or its firm reference number (FRN). You’ll usually find the FRN at the bottom of the provider’s website.
Check the firm is listed as authorised and has permission to carry out funeral plan contracts.
Make sure the website address and phone number match the ones on the register.

Memoria Direct Cremation is a trading name of Memoria Funeral Plans Limited, FRN 965287.

Questions to ask before you buy

Is the provider authorised by the FCA?
Is your money held in a trust or an insurance policy?
What’s included in the plan, and what isn’t?
Where will the cremation take place?
What are the cancellation terms, and are there any fees?
If you’re paying in instalments, what happens if you die before you’ve finished paying?
What happens if you move house?
Who should your family call when the time comes?

How Memoria Direct Cremation protects your plan

When you take out a plan with us, you’re protected in five ways.

We’re FCA authorised. Memoria Direct Cremation is a trading name of Memoria Funeral Plans Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 965287).
Your money is held in an insurance policy. The money for your funeral is held in your name with our chosen life insurance provider and is only paid out when it’s needed.
You’re covered by the FSCS. If Memoria Funeral Plans Limited were to fail, eligible customers can be protected by the FSCS, up to £85,000 per person.
The price is fixed for the services in your plan. Once your plan is paid for, there’s nothing more to pay for the services it includes. Anything outside the plan would need to be paid for separately.
We run our own crematoria. Cremations take place at a Memoria crematorium or at one of our chosen partners.

Because we run our own crematoria, we look after the cremation itself too. Jamie Saunders, Manager at Waveney Memorial Park and Crematorium explains what families most often want to know.

“People often want reassurance about what happens, how dignity is maintained, and what procedures are in place to ensure the correct ashes are returned. Many people don’t realise how strict and regulated the cremation process is, so explaining this can provide a lot of comfort.”

Jamie Saunders, Manager, Waveney Memorial Park and Crematorium

The Memoria Direct Cremation Plan costs £1,595 as a single payment, or you can spread the cost over five years if you’re aged 40 to 79. If you’re aged 80 to 99, you’ll need to pay in one go. Plans cover mainland UK only.

Frequently asked questions

Why are funeral plans regulated?

The government reviewed funeral plans in 2018 and decided customers needed proper legal protection. The Financial Conduct Authority has regulated them since 29 July 2022. Before that, the industry mostly regulated itself through a voluntary body called the Funeral Planning Authority, and if a funeral plan company went bust, there was no compensation scheme to fall back on. Plans sold today have protections that didn't exist back then.

What are the downsides of a funeral plan?

A plan only covers the services listed in it, so anything else, like a memorial service or flowers, would need to be paid for separately. If you change your mind after the cooling-off period, you'll usually pay a cancellation fee. Plans can also differ a lot between providers, so it's worth checking what's included and how your money is held before you buy.

Can the price of my plan go up after I've bought it?

No. With a Memoria Direct Cremation plan, the price is fixed for the services included, however long it is until it's needed. If you pay in monthly instalments, the amount you pay each month is fixed too. You'd only pay more if you chose to add services or make changes to your plan.

Is my money protected if I'm paying in instalments?

Yes. The same FCA rules apply whether you pay upfront or monthly, and so does FSCS protection if an authorised provider goes out of business. With Memoria Direct Cremation, if you die within the first two years of an instalment plan, your representative can cancel for a refund or pay off what's left. After that, your plan is carried out with nothing more to pay (terms apply). Read more about paying for your plan in instalments.

Can you cancel a funeral plan?

Yes. FCA rules give you at least 30 days after you buy to cancel without paying anything, and this can be longer for instalment plans. With Memoria Direct Cremation, you can cancel at any time. If you pay in one go and cancel within 30 days of your plan starting, you'll get a full refund. If you pay by instalments, you'll get a full refund if you cancel within two years of your plan starting. After that, you'll get back what you've paid, minus a £95 cancellation fee.

What happens to my plan if I move house?

Your plan covers anywhere in mainland UK, so if you move within the mainland, it stays the same. Just let us know your new address. If you're moving outside mainland UK, give our team a call to talk through your options.

How can I tell if a funeral plan is a scam?

Check the company on the FCA's Financial Services Register before you pay anything. Authorised providers aren't allowed to cold call you about funeral plans, so be wary of anyone who gets in touch out of the blue. Some fraudsters pretend to be genuine firms, so hang up and ring back on the number listed on the register. If you're not sure, call the FCA's consumer helpline on 0800 111 6768.