FCA Handbook - FPCOB 7 Prohibition on entering into long-term instalment payment funeral plans

You are viewing FPCOB 7 Prohibition on entering into long-term instalment payment funeral plans as of . FPCOB 7 Prohibition on entering into long-term instalment payment funeral plans was last updated on 29/07/2022.

Rules

Guidance

Related resources

FPCOB 7.1 Application and Purpose

Application

This chapter applies to a funeral plan provider.

Purpose

The rule in this chapter ensures that, subject to an initial maximum 24-month moratorium period, a customer who chooses to pay for a funeral plan contract in instalments receives the funeral under that contract even if the covered individual dies before the end of the instalment period.

FPCOB 7.2 Prohibition

Prohibition

(1)
A funeral plan provider must not enter into an instalment payment funeral plan under which the customer agrees to make payments over a period of longer than the moratorium period.
(2)
Paragraph (1) does not apply in respect of an instalment payment funeral plan under the terms of which (c) and either (a) or (b) below are met:
1. (a)
  There is no moratorium period;
2. (b)
  There is a moratorium period but:
  1. (i)
    a funeral will be unconditionally provided upon the covered individual’s death where:
    1. (A)
      this occurs after the moratorium period;
    2. (B)
      this occurs before the end of the moratorium period but the death is accidental;
3. (c)
  After any moratorium period has ended, no further payment is required following the covered individual’s death in order for the funeral specified by the funeral plan contract to be provided.
(3)
The moratorium period must be no longer than 24 months from the date on which the relevant parties entered into the funeral plan contract.

Guidance

This section is relevant to any instalment payment funeral plan which requires payments to be made over a period of more than 24 months. This may include a funeral plan contract under which the customer is required to make payments until the covered individual reaches a certain age or on a regular basis until the time of the covered individual’s death.

This section does not affect the position where a funeral plan contract has been cancelled either by the customer or by the funeral plan provider in compliance with the rules in FPCOB 13.

The effect of FPCOB 13.2.2R is that the death of the covered individual (other than by reason of an accident) within the moratorium period is treated as a cancellation of the funeral plan contract (unless the customer and firm have agreed for sums outstanding to be paid under FPCOB 13.2.3R). In this case, any instalments paid by the customer must be returned without deduction to the customer or (where the customer is also the covered individual) to their estate.

A funeral plan provider may agree a moratorium period with a customer of less than 24 months provided that it remains compliant with FPCOB 3.1.6R.