Apocalypse? What apocalypse?

There’s a wide and growing measure of agreement that the next big scandal to hit the funeral industry is going to centre on pre-need funeral plans.

On the one hand, there is intensifying anxiety concerning the robustness of trust funds. There are dark and disturbing rumours flying around about plans coming in underfunded.

On the other hand, there are rising fears of greedy or desperate small funeral directors pocketing money paid to them by clients for funeral plans. In America, scarcely a week goes by without some wretched undertaker or other being dragged off to court to answer a charge of embezzlement. 

With the Ponzi word being murmured ever more loudly, it’s no surprise to see one funeral plan provider seeking to gain a competitive advantage among undertakers by playing on fear: 

With increasing focus on the financial security of pre-payment funds, you may feel that now is the time to find out more about how your current provider operates. For example, do you know what guarantees are in place … you may be aware that the Actuarial Profession has set up a Working Party to review the prudential regulation of funeral trusts…

For consumers, a funeral plan’s attractions obscure its inadequacies. It gift-wraps money in a way no other financial product can. It’s an easy sell — which is why Age UK can get away with flogging pricey Dignity plans to its less well-off clients. 

It’d be interesting to know how many financial advisers have bought a funeral plan. And yes, how many of you undertakers and celebrants out there have bought one, eh? Come on, hands up. 

In the present climate Golden Charter has been dissed more than most. The perception is that it has grown increasingly aggressive in its selling methods to both undertakers and the public; that it is overheating and riding for a fall. There are some who mutter that Golden Charter is a hubristic bubble business. 

Unverifiable smears and rumours, exacerbated by industry factionalism, muddy the waters. They create fear and despondency; they are unfair. But they also serve their purpose. They intensify scrutiny; they compel plan providers to exert themselves to demonstrate their viability. They stimulate openness. 

So it is valuable to be able to publish the following communiqué from Golden Charter to its member funeral directors: 

As we are all aware, the funeral planning industry is founded on trust and confidence. We need the public to have total faith in the certainty that the money which they have laid down is secure and will provide the benefits that they have been promised when the time comes. 

Equally important in this equation is for the funeral director to know that the money secured in an insurance policy or Trust will be there when required and will produce a meaningfully relevant sum which will enable their services to be carried out profitably and in full. 

In recent years, inflationary growth has been low and has been considerably outstripped by funeral cost inflation. The wider economic picture is no different where wage growth has struggled to match inflation. This issue is one of the reasons why Golden Charter has grown a legal services business, providing a way of generating profits which can be added to the maturity values of our contributing funeral director’s plans. We will be making a further annual distribution of this surplus very shortly and, while this helps to address potential shortfalls, it is only useful if the underlying funding arrangements remain completely secure.

The ramifications of the banking crisis continue to rumble on and the financial regulators remain the recipients of much criticism, currently over the appointment of the former Chairman of Co-operative Bank. As a result, public confidence in finance companies remains fragile. With the media screaming about a multi-billion pound black hole in the Co-op Group’s balance sheet, it would be surprising if some plan holders weren’t concerned and that anxiety may also spread to holders of other plans. 

To avoid any possible doubts arising in the minds of our plan holders and your customers, Golden Charter will make a series of announcements about the strength of the Golden Charter Trust. The details will emerge following next week’s SAIFCharter EGM as it is only proper that we inform our owners first. We can, however, announce today that the Trust currently holds more assets than it requires to fully meet all of its forecast liabilities and, furthermore, it is in its strongest position ever. That calm progress through the financial storm has been achieved by following a cautious investment policy and adding prudent levels of growth on plans. Reassuringly, the Trust remains a firm foundation for all of your plan holders. 

More detailed figures will be released around the end of this month and any plan holders seeking more information about the Golden Charter Trust can be guided to the Trust’s website at www.goldenchartertrust.co.uk.