As of 29 July 2022, all funeral plan providers and their intermediaries (sales agents and distributors) in the United Kingdom will need to be authorised and regulated by the Financial Conduct Authority (FCA) in order to continue to operate. It will be a criminal offence if they continue to operate without the necessary authorisation.
Who is the FCA? Why is it important for the funeral plan sector to be regulated? What does this mean to the consumers and those who are considering purchasing a funeral plan?
The FCA is a body that authorises and regulates around 51 000 financial services firms and markets in the UK. The FCA ensures that the financial firms are honest and fair when dealing with clients and maintain the integrity of the financial markets. Fairness and integrity in the financial markets provide confidence to consumers, workers, investors and all other interested parties.
Authorisation by the FCA is an arduous process that can take more than 6 months to complete. They assess your business plan, systems, business processes, internal controls and key resources like capital, staff and management. Senior management is required to have the necessary experience, skills and qualifications in the financial services sector. Let me hasten to say that authorisation by the FCA is not the end game; firms are continuously monitored to ensure that they meet regulatory standards, that they are well run and have sufficient resources to deliver services adequately. Dealing with a firm that is authorised and regulated by the FCA, like Diaspora Insurance, should give peace of mind to clients.
The FCA protects clients/consumers by demanding firms to treat customers fairly. Treating customers fairly is a broad term that ensures that clients are not taken advantage of by unscrupulous service providers, that clients get the best and most suitable product to address their needs, that the price of the product reflects the fair value of the product and that claims are paid promptly and fairly. Fair treatment ensures that products perform as clients are meant to expect – it does exactly what it says on the tin. The bespoke Diaspora Funeral Cash Plan (DFCP) offered by Diaspora Insurance promises to pay out claims within 48 hours into any bank account worldwide on receipt of all the requisite support documents. In reality, all the claims that come to Diaspora Insurance are paid within 4 – 6 hours of receiving the necessary documents. We have paid more than $3million in claims to date. Diaspora Funeral Cash Plan being a cash-based cover treats customers fairly by guaranteeing that their cover is a worldwide protection without borders since cash knows no border and the same money can be used for burial abroad, repatriation, reverse repatriation, cremation or even ceremonial send-off in case of missing person presumed dead. People, especially diasporans are fairly transnational citizens and are best covered on a transnational funeral plan as opposed to a rigid funeral directors’ goods and services policy.
Clients are at a higher risk to be abused and mistreated by funeral plan providers that are not authorised and regulated by the FCA. This risk extends to burial societies, associations, welfare groups, and other private funds that are set up to fund funerals. Some diasporas resort to these groups and burial societies to help meet end of life expenses but that is not a sustainable way. The FCA requires firms to put measures to protect client money (premiums) and firms are also required to put adequate risk transfer mechanisms. Diaspora Insurance is reinsured by global reinsurers that have the capability and capacity to promptly settle claims as they arise. Such layers of consumer protection and treating customers fairly by ensuring sustainability of cover cannot be guaranteed by unregulated funeral plan providers, burial societies and welfare associations and many diaspora communities are awash with victims of such informal arrangements.
Ensuring that products and services are appropriate for the target market and that they meet its needs is also a very important outcome of the treating customers fairly principle as prescribed by the Financial Conduct Authority. This is why Diaspora Insurance created a bespoke cash cover for its target market, Diasporans. We want to create value for our target market, the global villagers. Cash offers a lot of flexibility to diasporans as compared to traditional goods and services policies that become worthless when they relocate because of their rigidity. Some funeral plans only do repatriation to Africa but preferences and circumstances change in the future. Truth be told, people’s preferences, choices and location are not rigidly fixed; they tend to be fluid over time. Any such change should never invalidate or reduce the effectiveness of one’s funeral cover. Fast forward time into the future, your decision to be repatriated to Africa may change and you may want to be laid to rest in the UK or USA or Australia or any country. What do you do with your funeral policy that only promised to repatriate you when you pass away? Some diasporans may voluntarily relocate to their countries of origin after paying for repatriation for years and this invariably means that the element of your funeral plan that promised to repatriate you becomes worthless and you get no compensation. But if you have a cash cover, this means that you are covered no matter what decision you and your family make in the future. If you relocate to any other part of the world, you remain covered – a protection without borders.
The FCA also promotes healthy competition within the industry. Competition ensures that consumers have choices and that firms win business based on suitability of cover, quality, innovation, price and excellent service. Diaspora Insurance has a high rating on Google reviews, demonstrating excellent service. The key product, Diaspora Funeral Cash Plan, is an innovative product that speaks to the needs of the market, unlike the rigid traditional services that offer only repatriation.
Dealing with regulated firms, also ensures that you are protected by the Financial Ombudsman Services (FOS) and Financial Services Compensation Scheme (FSCS). The Financial Ombudsman Service settles complaints and disputes between clients and financial services firms – it is the final arbiter. Who do you complain to when your unregulated provider runs away with your premiums or refuses to settle your claim? The Financial Services Compensation Scheme protects your investment or insurance by paying out your claim if the insurer goes out of business and cannot settle your claim.
It is very clear why each client should check whether their funeral plan provider is authorised and regulated by the FCA before they buy their products and services. It is easy to do that; just simply go to the FCA website https://www.fca.org.uk/firms/financial-services-register and type the company that you are searching. There are huge benefits in dealing with firms that are authorised and regulated by the FCA like Diaspora Insurance. Why do you have to play Russian Roulette with you family’s future by taking funeral insurance from unregulated firms?
Dr Sibert Mandega
Executive Director, Diaspora Insurance
ABOUT DIASPORA INSURANCE
Diaspora Insurance is the provider of the bespoke Diaspora Funeral Cash Plan, a funeral cover designed for Africans living in the diaspora away from their countries of origin. The Diaspora Funeral Cash Plan offers immediate financial intervention and pays out US$/£/€/R cash within 24 hours of proof of death. The cash takes care of funeral expenses for its registered members and to date has paid out over US$3 million cash in settled claims to its clients. Click here for more Diaspora Funeral Cash Plan Benefits.
