Thoughts from an unaffiliated funeral director (iii)

Fran Hall

Today’s offering from a person who wrote to the FSCSR in response to the invitation for unaffiliated funeral directors to contact the independent chair was sent by us on their behalf.

The author chose not to identify themselves in the letter because it had to be sent to the independent chair via the FSCSR Secretariat, which is run by the trade associations that this individual has elected not to belong to.

It struck the writer that this meant their letter would potentially be read by others, and they preferred that their name and location not be identified in such a way.

Obviously we know who the author is, but we are preserving their anonymity in publishing their letter without attribution.

(Postscript – the independent chair of the FSCSR has subsequently been in direct contact with the author and assured them of his independence.)

 

Dear Mr Shand-Smith

Re: Call to non-trade association affiliated funeral directors to share their views

I write to you in your capacity as Chair of the Funeral Service Consumer Standards Review to explain who I am and why I no longer belong to the NAFD, and also to highlight some of the failings within the Trade Associations.

I would also say that this call to us to respond is incredibly short notice and unlikely to be a great success given the time of year. I hope sincerely that that wasn’t your intention.

I am an independent funeral director who started up from scratch 11 years ago. I had only briefly worked in the funeral profession prior to opening, our facilities were very basic and we relied on a friend (and business partner) for help with staff, logistics and vehicles.

We did not join a Trade Association for a couple of years but we (myself and my wife) studied the Dip. FAA with the NAFD as soon as we started. As time went on we decided to give our business the added credibility of membership to the trade organisations SAIF and the NAFD. We are no longer members of the NAFD, reasons for which I shall outline later, but it was our decision. We are members of The Good Funeral Guide though, a consumer guide to good funeral practice.

We knew what we needed to do to succeed, and how to do it, and tighter regulation may have prevented us from opening but would that have been a good thing? We are now as big a business in our area as all the other firms and carry out as many, if not more funerals a year as anyone else in our area, because we fulfil a need and we do it well.

It is my belief that new businesses do not start up to rip off the unsuspecting consumer but because they have identified that consumers are currently being ripped off and they can offer a better service! This may not strictly be true in all cases but a lot of new businesses start up because the old family-run firm has been taken over and things are no longer done in the way they were, much to the embarrassment of the staff and disappointment of the customers.

In a report by Beyond.Life into Dignity Funeral Services and their share price they show that, and I quote:

“Between 2005 and 2016 (“the historical period”) the Company delivered:

Revenue growth from £143 to £314 million (7.4% cagr)

Operating profit growth from £42 to £98 million (8.1% cagr)

EPS growth from 22.4p to 119.8p (cagr 16.5%)

There have been two drivers of this historical performance:

a 53% increase in the number of branches (3.9% cagr); and

an 81% increase in pricing (6% cagr)

Branch expansion has mainly functioned to keep customers steady and offset a collapse in branch productivity

Dignity’s market share has been static at c.12% with customer numbers ranging from 62,300 to 73,500 as a function this static market share and a variable UK death rate

Branch productivity, in terms of funerals performed per location per year, has collapsed by more than 30% from 129/year in 2005 to 87/year at H1 2017.

Acquired locations typically provide around 150 funerals per year initially, offsetting customer losses elsewhere in the portfolio.

Pricing has been used to provide constant top-line growth

With customer numbers flat over the historical period, pricing has been used as a lever to provide revenue growth

Prices increased every year between 2005 and H1 2017 from £1,699 to £3,153 at a cagr of 5.6%, in line with the growth within the Funeral Services segment cagr of 6.1%

Effectively, management have driven top line growth through large price increases across the existing portfolio, whilst offsetting decreasing customer numbers in the existing portfolio by acquiring new locations. The net result is that Dignity serves roughly the same number of customers each year but charges each of them a higher price.” The full report is available here.

This, I believe is why new start-up businesses come about, and tighter regulation may prevent them from doing so, holding the public to ransom with high charges and lower standards offered by the big chains.

As an example of this, when our local branch of Dignity was taken over in 2006 they were carrying out the vast majority of funerals in the area (circa 600 per year), now they carry out about 250. You need to be asking why!

The Co-op has never really featured locally and Funeral Partners are not in the area so Dignity is our only point of reference for this.

It is my opinion that any investigation into the funeral profession should be aimed primarily at the big groups of funeral directors, to understand why they have lost half of their customers in the years after purchasing the business, why their charges are consistently higher than that of independents, despite them having all the economies of scale that the independents do not, and why they have a high turnover of staff, certainly a feature in our area, and I would plead with you not to let this whole investigation be led by the one group of people that need to be investigated but by proper, independent consumers.

Let it be led by those who may need our services, not by those who provide them. Would you let a second-hand car industry investigation be led by second hand car dealers? The trade associations exist purely to protect the interests of their members, NOT THE GENERAL PUBLIC.

There have also been TV programmes into malpractice in the funeral profession. Dispatches, on Channel 4 in 2012 uncovered various horror stories at the Co-op, as did the ITV report The British Way of Death with Funeral Partners. I’m sure that there are some unscrupulous independent funeral directors too but stories in the media would suggest that there are more complaints with the bigger firms.

After joining the NAFD I attended several of the local branch meetings but half of the room was filled with Co-op and Dignity members and no one seemed keen on bringing them to account for their high prices or shoddy practices. Their chief concern seemed to be who was next in line to receive the Chain of Office and who was buying the drinks!

On Radio 4 one Sunday in December 2018 there was an interview/ discussion about funeral costs featuring Abi Pattenden, then President of the NAFD and Louise Winter, a new and progressive funeral director in London.  Ms Pattenden’s arguments for defending the costs charged by some of her member firms were shocking and she was thoroughly shot down by Ms Winter on all counts. She was poorly prepared and, maybe because she actually works for an independent firm, didn’t really believe what she was saying. It was for this reason that I decided that the NAFD no longer represented my views. A belief I still hold.

In summary, I ask you to take a long hard look at our profession, but from the outside. There is absolutely no point in asking the membership of the largest trade organisations what they would like to see, when they obviously want to defend their members.

This needs to start from the other end, what do consumers want, where are they most likely to get that. Look at Beyond.life’s price comparison website, it’s not that great and I’ve had my disagreements with them but you can see a guide to funeral costs there. Ask probing questions to leaders of big companies and small. FIND THE TRUTH.

I do hope that you can take my points seriously and consider the view from the other side of the arrangements table. Please do feel free to contact me if I can be of any further assistance.

With kind regards

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Sue Whitlock
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Sue Whitlock

Many thanks to the writer of this submission. All this so badly needs to be recognised – and by the public, who are most likely to use the FD their family and friends have used in the past, without checking out any other companies. In most businesses the opinion of the consumers is all important. So any investigation of funerall practices should include a survey of customers, both past and potential, to find out what really matters to them.