Pre-paid funeral plan company Safe Hands has fallen into administration putting around 45,000 policyholders at risk.
The Wakefield-based business’ collapse follows its decision to withdraw from the Financial Conduct Authority’s authorisation process on February 15 ahead of incoming regulation for the funeral planning sector.
FRP Advisory’s Nedim Ailyan and Ben Stanyon were appointed on March 23 as joint administrators of Safe Hands.
They said the firm faced “severe financial challenge which has left the business unsustainable in its current form”.
An interim funeral services provision by Dignity Funerals Limited has been put in place for the next 14 days while the administrators explore potential outcomes for the tens of thousands of policy holders whose funds currently sit with Safe Hands.
The firm is no longer providing funeral planning services to existing customers, current plans have been terminated and the firm is no longer taking any direct debit or standing order payments, according to its administrators.
“Our immediate focus has been to secure an interim funeral services provision with Dignity for the next 14 days to ensure that any plan holders that pass away are cared for whilst we seek to find a longer-term solution,” said Ailyan.
“Regrettably, the administration means the company is not in a position to issue refunds at this time. We appreciate how upsetting this period of uncertainty will be for Safe Hands Plans’ customers and their families.
“We will contact all plan holders, and personal representatives of any deceased plan holders, to outline the process for registering a claim as part of the administration.”
Howard Hodgson, chief executive officer of cremation service provider Memoria Group, said the collapse of Safe Hands “underlines the need for the prepaid funeral industry to be fully regulated”.
“Only by regulating the prepaid funeral industry can responsible providers be differentiated from unscrupulous operators,” he added.
The funeral plan industry will come under the regulation of the FCA from July 29, 2022.
In total, there are now 65 firms listed as requiring authorisation in the sector, according to the FCA’s register.
Seven firms have not yet submitted their applications, a considerable fall from the 30 which had not submitted their applications just a month earlier.
Meanwhile, around 13 firms have told the FCA they are planning not to apply for authorisation and are planning to transfer their existing plans to another provider.
Just two providers alongside Safe Hands have withdrawn their applications. These are Yorkshire-based firm Eternal Peace Funeral Plans and Surrey-based Aura Life.
One provider, PS Cremations Funeral Planning, has changed its application status in the last month from ‘withdrawn’ to ‘not submitted yet’.
Toby Doyle, chief executive of funeral price comparison site Memorialise, said: “Funeral Plan sales have often not been driven by the need to provide customer value and a worthwhile valuable product, but by offering high-cost ineffective plans which often do not do what they are supposed to do, and the primary purpose of which is to pay excessive commissions to middlemen.”
