(Reuters) – Britain threatened to introduce more durable regulation for pre-paid funerals on Friday, saying it believed some suppliers weren’t treating grieving households pretty, an announcement that despatched shares in funeral companies company Dignity Plc (DTY.L) down sharply.
The government mentioned the $2.65 billion (2 billion kilos) business’s self-regulatory framework is probably not ample, including that it was “appalled” by some gross sales practices. It would contemplate asking the Financial Conduct Authority to supervise the sector.
Dignity and Co-op Funeralcare – a part of mutually-owned Co-Operative Group (42TE.L) – dominate the market in Britain. Their affords embrace pre-paid funeral plans that allow prospects pay for a funeral on the market worth on the time of settlement.
Britain’s Competition and Markets Authority, conducting a separate investigation into the sector, mentioned the common price of a funeral was practically three,800 kilos in 2017, with these on the bottom incomes doubtlessly spending as much as one third of their annual earnings on a funeral.
Extra prices pile as much as one other 2,000 kilos, leaving many individuals involved about taking up debt.
The CMA mentioned it might examine whether or not the knowledge supplied by funeral administrators on costs and companies was clear sufficient for folks to have the ability to select the best choice. It can even have a look at how costs have modified.
The rising degree of cremation charges can be thought of as a part of the overview, with cremations now estimated to account for round 75 % of all funerals, the regulator added.
Shares of Dignity, Britain’s largest listed funeral service supplier, fell as a lot as 14 %, setting them on track for his or her worst day because the company mentioned in January it might reduce costs for a few of its companies.
Both Dignity and The Co-operative Group welcomed the news and mentioned that they had each beforehand known as for extra transparency.
“As part of our support for these reviews, we expect to share the work we have already collated to support the calls for regulation we have been making for some time,” Dignity’s CEO Mike McCollum mentioned.
Brokerage Peel Hunt, nevertheless, mentioned the overview got here at a nasty time for Dignity, because it trials new worth fashions.
“The outcome may just be greater visibility on pricing, but this will be unhelpful for Dignity given its current premium pricing,” it mentioned, maintaining a “hold” score on the stock.
The Co-operative group mentioned it has launched new merchandise and initiatives to assist deal with funeral affordability.
Demand for funeral plans has grown considerably in recent times, with annual gross sales greater than tripling between 2006 and 2017, the government mentioned.
“I’m appalled by the lengths that some dishonest salesmen have gone to in order to sell a funeral plan,” mentioned John Glen, financial secretary to the Treasury.
“There are thousands of pre-paid funeral plans bought each year, and most providers are fair and legitimate. But tougher regulation will ensure robust standards are enforced for all plan providers, and protect individuals and their families if things go wrong.”
The announcement echoes strikes by the government to clamp down on anti-competitive pricing within the home vitality market and in addition within the provision of high-cost loans, in a bid to guard shoppers at a time of low wage development and rising prices.
Reporting by Arathy S Nair in Bengaluru; Editing by Kate Holton, Georgina Prodhan and Peter Graff