Video report by ITV News Consumer Editor Chris Choi
New figures obtained by ITV News show UK consumers spending billions of pounds for funerals before they pass away.
Customers are eager to 'buy before they die', aiming to avoid the escalating cost of a final send-off.
In an ITV Tonight programme to be broadcast on Thursday, bereaved relatives who are calling for new regulation in this booming industry.
TV viewers will not have missed the celebrity-led TV commercials. The pre-pay funeral sector is growing so fast the Government is considering new rules to police the sector.
At present there is no statutory regulation of the industry.
New figures from the Funeral Planning Authorityshow the sheer scale of the “pay before you die” funeral plan industry:
Graeme McAusland of the Funeral Planning Authority told ITV News: "I think funeral plans are a really good way for people to put in place the sort of funeral they want in a controlled and thoughtful way. "It allows people to manage the costs in terms of what the funeral is going to cost them."
Here’s how a funeral plan works:
Pre-pay firms offer a selection of options, typically ranging between around £2000 and £6000.
Once you buy, the pre-pay firm contracts an undertaker. They guarantee that no matter how much funeral directors’ fees rise, you will get your final send-off at today’s prices. The pre-pay firm administers the plan up until the time of your death – and beyond.
As well as using your money to pay for the funeral director, the firm often retains a slice for themselves.
They say this is a normal business practice, but it does mean that less goes to the undertaker than you paid into the plan.
David Bulmer from Tamworth says pre-pay funeral firms need to be far more open about the sums they retain.
His wife, Lyn, died just months ago – she had planned and paid for her final send-off in advance with a company called Safe Hands.
Lyn had paid in just over £3000, but David found out that £445 had been kept by the funeral plan firm as its own revenue – money that never went to the undertaker.
David Bulmer said: "If I’d known at the time, I’d have said to Lyn we’ll take that £3000 and put it in an account. I know the interest rate isn't brilliant, but she wouldn't have lost £400."
Pre-plan firms are under no legal obligation to disclose what portion of your money they keep as profit or to cover their overheads.
The industry says consumers still get a good deal because they negotiate wholesale prices.
In the case of David Bulmer's wife, Safe Hands says she still had a funeral worth at least £3,000 - in fact they even paid some additional costs and say no complaint was raised at the time.
Financial expert James Daley was hired by one funeral company to investigate the industry and found that the cost of admin fees can vary, with some companies charging a lot more than others.
He said: "The scale of the admin fees can be anything from a couple of hundred pounds for some companies who are really modest and actually trying to do the right thing in this sector – up to £600/£700 in other cases."
The pre-pay funeral industry has grown so rapidly, there are fears that consumers' understanding of them has not kept pace. Many plans specify a list of items not covered.
These can include: grave plot, headstone, church service, wake and flowers.
Other ingredients of a funeral such as cremation and burial fees are not always guaranteed to be paid in full - instead a contribution will be made.
If those prices rise beyond the contribution, relatives could be left with a funding shortfall.
The industry says any such shortfalls would be relatively small and that all costs under the control of the funeral director are guaranteed.
James Daley said: "Make sure you are very clear on what’s included and isn't included – and get it written down."
Financial expert James Daley gives his advice on what to look out for when buying a funeral plan
"Communicate all of that to your family so that those people who might be carrying out your funeral and organising it for you are very clear about what you expected”.
The Funeral Planning Authority operates voluntary standards which cover 95% of plans sold.
We asked the Authority’s chief executive, Graeme McAusland, why the code of practice does not insist that firms warn customers of potential shortfalls.
He told ITV News: "I think the messaging around that is clear. Now, whether there is more that could be done to explain that to customers – I think there probably always is."
He believes the popularity of ‘pay before you die’ funerals will continue to climb and the FPA is reviewing its code including how potential shortfalls are explained.
The argument for greater protections around pre-pay funerals is boosted by one simple fact: by the time they come to use the service they’ve paid for, customers wont be around to complain.
Pay Now, Die Later: Funerals Uncovered will be broadcast on ITV's Tonight programme at 7.30pm on Thursday 11th Oct. It will be available to watch after that time on the ITV Hub.