The CMA interim report on the funeral industry is taking time to digest across funeralworld.
It’s not surprising, it’s a chunky document. And it’s possibly proving quite indigestible for some, particularly the PR teams at Dignity, Co-op and Funeral partners.
The essential conclusion is – the funeral sector is not functioning well. Competition is not working effectively, price rises can’t be justified, and bereaved people are at risk of being exploited.
Finally, an official body is seeing what we have been pointing to and writing about for years.
And an official body with clout. The CMA proposes to make a Market Investigation Reference (MIR) into both the funeral market and the cremation sector.
This in turn could lead to recommendations to government to impose transparency requirements, changes to the regulatory framework regarding funeral directors or the establishment of a regulatory body, with the possibility of CMA-led price regulation.
The interim conclusion found that:
- The extreme vulnerability of customers has been a major factor in enabling suppliers to charge high prices in the sector for the past 15 years, rather than underlying cost pressures, and it appears to us that Dignity’s pricing policies have acted as the engine of these price rises, with others in the market appearing to follow its lead. This is true in relation to funeral director services, and, to a lesser extent, funeral services.
- In addition to large annual price increases, the supply of funeral services is characterised by large price differentials between suppliers, including within local areas. Such wide price differences appear hard to explain on the basis of cost, range, quality and brand differences between suppliers.
- The yearly high price rises implemented by the major suppliers have directly boosted their profit margins for a persistent period of time, The EBITDA margins of Dignity have been well above international benchmarks, while those of Co-op and Funeral Partners are at the higher end of them.
- When considering these profit margins alongside long-term policies of large price rises unrelated to underlying cost pressures, it seems clear to us that this is a market that is not functioning well, to the detriment of vulnerable consumers.
Andrea Coscelli, chief executive of the CMA, said: “People mourning the loss of a loved one are extremely vulnerable and at risk of being exploited. We need to make sure that they are protected at such an emotional time, and we’re very concerned about the substantial increases in funeral prices over the past decade.
“We now feel that the full powers of a market investigation are required to address the issues we have found. We also want to hear from people who have experienced poor practices in the sector so that we can take any action needed to fix these problems.
The two funeral directing trade associations don’t fare too well either, in particular the NAFD who nominates itself as ‘the Voice of the Profession’. Among their members they number Dignity, Co-operative Funeralcare and Funeral Partners Ltd. The three companies mentioned directly by name as profiting substantially from yearly high price rises are members of the NAFD.
“We recognise that trade associations bring a number of benefits to their members and may also be of benefit to consumers. However the evidence we have seen indicates that the two trade associations have fallen short of bringing about the level of transparency that is necessary to facilitate consumer choice. The evidence also indicates that the trade associations’ focus on supporting the commercial interest of its members may have been detrimental to competition, as illustrated by the approach taken to matters relating to online price transparency and the development of online comparison tools.”
So, all not so rosy for the Voice of the Profession, despite the NAFD PR statement in response which oddly seemed to have missed the point made by the CMA about their failings (it’s at point 4.101 on page 64).
This morning, BBC Radio 4 Sunday programme invited the current president of the NAFD to debate funeral costs with Louise Winter, founder of Poetic Endings (GFG Recommended funeral director and member of the Good Funeral Guild).
Listen here from 35 minutes 44 seconds.
It was an interesting few minutes.
We’d like to suggest that the NAFD explores the meaning of ‘debate’ as opposed to bulldozing through a discussion without drawing breath and requiring the other person to have to interrupt to make their point. Talking for over half of the allocated eight minutes is not good manners.
Here are a few excerpts:
From the NAFD representative in response to the suggestion of price capping:
“In some cultures, there is a necessity to spend money on a funeral as a mark of respect for the person who has died so you have to be very careful about making sweeping statements..”
Louise’s response: “That does not give the big corporates whatever price they want, well above the inflation rate every year, with their sole intention being to make as much money as possible for their shareholders. The people who are doing this are members of your organisation, your trade association, which supposedly exists to protect bereaved people and to help them have the funeral they want. It’s not. It’s just protecting the funeral directors and the costs that they are charging.”
NAFD response: “We protect bereaved people by giving them access to standards that can be guaranteed and a scheme of independent redress should something go wrong..”
And Louise cut in with “And outrageous prices, with no transparency, with only a third of your members putting their prices online”.
Worth a listen!