WORRIED customers have been phoning funeral directors in York over reforms which, they fear, could see people getting caught out.

Over the past four years the Government has conducted a review of the funeral industry in a move to provide the public with better protection.

The funeral plan market is being reformed and, as of July 29 this year, it will fall under the regulation of the Financial Conduct Authority (FCA) who will ensure that all plans are properly underwritten.

The FCA says reform is needed because elderly and vulnerable customers have been subjected to unfair practices like high pressure sales tactics and cold calling, and it wants to raise standards.

The worry is that smaller companies might not have enough money in the bank to satisfy the FCA and may go out of business.

After reports in national newspapers, Martin Rowley, of Rowley and Sons in York, says he and other city funeral directors have had lots of calls from concerned members of the public.

He said customers are worried that this could mean their provider will go to the wall, leaving them out of pocket.

He said: “By far the best thing to do if anyone wants a funeral plan is to go and see your funeral director. There are six funeral directors in York, all offering funeral plans, so there is a choice of funeral directors and of funeral plans.

“They will even come to your home and talk you through what a funeral plan does.

“From July 29 you cannot sell a funeral plan unless you are regulated and it’s something I welcome.

“My advice to anyone who already has a plan is to check your documentation, speak to your provider and ask them what guarantees they will still give you.”

Mr Rowley said that there are about 65 firms that operate in the sector and a large number of them are likely to struggle.

Whilst many of the larger, more reputable firms are expected to be granted authorisation by the FCA, others are unlikely to even apply for authorisation or will be turned down.

If that happens they won’t be able to operate beyond the July 29 cut off.

James Daley, the managing director and co-founder of consumer group Fairer Finance, said: “If you’re in the cooling off period, after having recently bought a plan you can cancel free of charge and you’re with a smaller company you’re worried about, then cancel because there’s no cost.

“But if you’re going to incur a cancellation fee, and some of these policies charge up to £1,300 in cancellation fees, my advice would be to sit tight for now.

“Rather than crystalising a loss it may be better to hold your nerve for a few weeks or a few months and see what this settlement ends up being.”

The government said: “Bringing pre-paid funeral plans into regulation will protect consumers from bad practice within the sector including by exposing any unsustainable business models and preventing problems from getting worse, and impacting more consumers.

“This follows extensive consultation and the Financial Conduct Authority is now taking proportionate steps to regulate these pre-paid plans.

“The FCA’s guidance is clear that firms not seeking authorisation should transfer their existing books of business or wind down in an orderly way before regulation starts.”