In the shadows of the failure of preneed funding vehicle Safe Hands Plans, the British government is being urged to set up a fund for those that have lost funds through the collapse of Safe Hands Plans. As you may know, the British preneed industry is to come under the purveyance of the country’s Financial Conduct Authority (FCA) at the end of July 2022.
However, prior to that happening, one company has come under a government authority after it has been determined that about 46,000 policy holders have lost their investments that were to be held to pay for future funeral services. FRP, the company hired to handle the administration says the company does not have enough funds to cover commitments.
According to this article from the Guardian “FRP is still getting to the bottom of what happened to Safe Hands’ cash but its recent update painted a grim picture. The private equity-backed company used two fund managers to invest customers’ money, FRP says, one of which has gone into liquidation. It has about £4m (US $5.03 million) in cash as well as shares in UK-listed firms, which can be sold. However, a significant proportion has gone into high-risk investments, often in offshore jurisdictions.”
As for the government setting up a safety fund for Safe Hands Plan holders, here’s what Fairer Finance Managing Director James Daley had to say according to the Guardian article, ““It has always been my view that the Treasury is on the hook for this because we knew the act of regulation (the FCA regulation scheduled for July) would crystallize losses for a number of people holding plans at the moment when these rules came in and bad actors exited the market. . . . .Safe Hands was always going to be the biggest company that looked likely to fail but there are still lots of small and medium-sized companies whose status is unclear.”
Funeral Director Daily take: The collapse of Safe Hands Plans is just a bad deal all around. . . especially for many who lost funeral savings. If James Daley is correct, this plan collapse may just be one of many plans that fail. Let’s hope not.
It’s time that some regulation in Great Britain is put on these plans. I’ve always been warned on anything I buy about the term “Caveat Emptor” or “Buyer beware”. It’s a sad state when Great Britain’s senior population has to be concerned about that when paying for their funerals and probably about time that the industry comes under regulation.
There’s been preneed money lost in the United States over the years also. However, I’m guessing that virtually all of the 50 states have some type of regulatory rules about the preneed funding of funerals by now.
Let’s hope that Great Britain can get to the regulatory time frame without any more companies going under.
Related Article — “Advisors split on funeral plans coming under FCA remit” Financial Times Advisor (Great Britain)
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