Like everyone else who responded to the Competition and Markets Authority’s consultation on whether to make a market investigation reference for the funeral market, we received an e-mail last week. The e-mail invited us to share our views on whether the said MIR should also cover the delivery of funeral services obtained via a pre-paid funeral plan.
And like everyone else concerned with the state of the current funeral market, we will be submitting our considered opinion on this matter. Which is that yes, there absolutely should be further scrutiny of the funeral sector with regard to the provision of funeral services arising from redemption of pre-paid funeral plans.
This blog has covered the subject of funeral plans on no less than 47 occasions over the years. And our opinion hasn’t changed. On the whole, and with the exception of the Good Funeral Guide Pre-Paid Funeral Plan (which isn’t like any other funeral plan we’ve come across) – we have little time for funeral plans.
We make no apology for again repeating the quote from Thomas Long in his and Thomas Lynch’s ‘The Good Funeral – Death, Grief and the Community of Care’ because it sums up pretty much what we think:
“The ‘buy now, die later’ brand of package deal has meant a lost connection between the sale of funerals and the delivery of them, and with it the loss of face-to-face accountability between buyer and seller that used to provide reliable consumer protection. Now the recipient of the services (the bereaved) and the provider of same (the funeral director) are both perilously out of the loop of the original transaction: a deal often brokered years before, between a commissioned salesperson and the now newly deceased. In such an environment there can be little real accountability.”
Notwithstanding this lost connection between the parties concerned with the funeral, in their consultation on scope of the proposed market investigation, the CMA notes the following:
‘In some respects, the position of the purchaser of a funeral plan from a plan provider may be similar to the purchaser of funeral services at need from a funeral director. In both cases, a lack of clear and comprehensive information about price, range and quality, combined with likely inexperience (as purchasing funeral plans or arranging funerals are generally infrequent purchases) mean that the customer is likely to lack the ability to assess properly the value for money of all the options offered.’
Definitely worth a closer look then.
The CMA’s invitation to offer a viewpoint isn’t restricted to just those who responded to their previous consultation, so if you have an opinion on whether the CMA should be looking at the services provided in ‘redemption of pre-paid funeral plans’, please drop them a line. You have around nine days in which to do so.
Postal address: Funerals market study team, Competition and Markets Authority, Victoria House, 37 Southampton Row, London WC1B 4AD
Email address: funerals@cma.gov.uk
Here’s the content of the e-mail:
“In November 2018, the CMA consulted on its proposal to make a market investigation reference in relation to the supply of services by funeral directors at the point of need and the supply of crematoria services (in both cases within the UK). The draft terms of reference excluded from the meaning of ‘services by funeral directors at the point of need’ both the provision of pre-paid funeral plans and the provision of services provided pursuant to prepaid funeral plans.
The CMA has received representations, in response to this consultation, that the scope of the proposed market investigation reference should be extended to include the funeral services supplied by funeral directors in the United Kingdom arising from the redemption of pre-paid funeral plans.
The CMA is, therefore, inviting interested parties to provide views on whether, if the CMA decides to make a market investigation reference, the scope of the market investigation should include the delivery of such services.
The consultation document can be accessed on the Funeral market study case page at: https://www.gov.uk/cma-cases/funerals-market-study
Comments should be provided to the CMA no later than 5pm 13 March 2019.
We’re a bit late to the party, as this came out last week, but we were prompted by a comment from a regular reader on another blog post (thanks Andrew!!)
We were delighted to see one of our Recommended Funeral Directors featured in a documentary on ITV. Poppy’s Funerals were described as ‘female-led funeral directors out to buck several trends in male-dominated industry’.
We like that!
Watch the full clip here.
Apparently, according to an article in today’s Times, ‘funeral companies have been told to make fees transparent’.
No they haven’t.
Read the entire piece. It begins with this statement: ‘Funeral directors have been ordered to publish their full fees online after concerns about the soaring cost of services.’
No they haven’t.
Later in the piece is the more accurate statement – ‘the NAFD intends to consult with members on adding additional mandatory requirements to the code of practice’
So, they haven’t. And they haven’t.
Shoddy reporting Mr Byers.
(Thanks to Charles Cowling for spotting this)
Here’s a salutary tale for anyone who is seduced into buying a funeral plan in order to ‘get on with enjoying life’, or ‘protect your family from future costs and worry’ or to avail themselves of the ‘peace of mind that your funeral costs and arrangements have been taken care of’, or whatever the latest snake oil sales pitch currently in use promises..
Back in 2007, a person who wishes to remain anonymous (but who has given us permission to publish this information) decided to do the responsible thing and organise their funeral in advance.
She purchased a funeral plan from Royal London, that UK’s ‘largest mutual life, pensions and investment company’.
She paid £3,304.53 by instalment payments for what she thought was the cost of her own future funeral. And she thought no more about it until 11 years later when she had to arrange a funeral for her best friend.
This funeral was carried out by a small, independent funeral director, and the holder of the Royal London funeral plan was so impressed that she went back to the small, independent funeral director to ask if they would be able to carry out her own future funeral – the one she’d paid for by buying a funeral plan. She thought it was called a Dignity plan, and her understanding was that she could decide which funeral director could be used.
The small, independent funeral director spent almost two hours with her trying to work out the current value and situation of the funeral plan, including a phone call to the plan provider that lasted over an hour. The plan provider of the funeral – that had been bought from Royal London -turned out to be Dignity Funeral Plans.
It transpired that the plan purchased in 2007 for £3,304.53 was now valued at £3,488.25. This total included £827.92 towards third party costs, i.e. the cremation fee, the doctors’ fees and the cost of a minister or officiant.
So over 11 years, the value of the funeral plan she had bought had gone up by just £183.72. It seemed that interest was only accrued on £640 of the money she’d paid – the money allocated towards the third party costs. The remaining £2664.53 hadn’t attracted any interest at all.
Now, the person who had bought this plan wasn’t very happy with this, and nor was she happy with the fact that her funeral would be carried out by a branch of Dignity Funerals when she wanted it to be carried out by the small, independent funeral director. She particularly wasn’t happy with the way the person on the other end of the phone was speaking, and she wanted to cancel the plan there and then.
The small, independent funeral director said that she ought to go away and think it through. They said they would write to her to set out her options so that she was really sure that was what she wanted. The holder of the plan agreed, and arranged to come back in a couple of weeks once she’d had a chance to read the information that the small, independent funeral director had put together for her about the costs of cancelling and the alternative choices she would have.
A few weeks later, and even more determined to cancel, the holder of the plan went back to see the small, independent funeral director and confirmed she definitely wanted to cancel the plan. Because she had been so unhappy with the way the previous phone call to the funeral plan company had gone, she decided to record the phone conversation, which was on loudspeaker in the office of the small, independent funeral director.
Below is the transcript of the 15 minute phone call that took place.
Bear in mind, this is a call to a branch of the UK’s self-proclaimed ‘Leader in Funeral-Related Services.
This is how they describe themselves:
‘Our funeral directors date back to 1812 and last year we conducted 68,800 funerals, with 99% of families we served saying we met or exceeded their expectations. As a financially stable company, with a long reliable history, we have the stature and capability to stand behind the guarantees made to every Planholder. Funerals are all we do, so you’ll be in experienced hands from the moment you take out a funeral plan to the moment your loved ones need to talk to one of Dignity’s 1,200 owned and approved funeral directors’.
Oh, and just to explain the confusion our plan holder had – if you look at the Dignity Funeral Plans website FAQs, this is what you’ll find:
‘All Prepaid Funeral Plans from Dignity guarantee to cover the cost of the Funeral Director services and the third party cremation costs specified – these are cremation fees and Minister’s or Officiants’ fees. Some other providers only provide a contribution towards the cremation costs.’
Dialing tone
“Good afternoon, you’re through to ‘Person 1’ at Dignity Funeral Plans, how can I help you today?”
“Hi, can you put me through to somebody that I can speak to to cancel my plan please?’
“OK, I can certainly help you with that today. Is it possible to take – have you got your plan number to hand at all?”
“Yeah, it’s XXXXXXXXXXXX”
“Thank you. Is it possible to take your name please?”
“Yep, it’s XXXXXXXXXXXX”
“Thank you. OK, so, what I’m going to do, I’m going to pop you through to one of my colleagues who’ll be able to help you today.”
“Yes, that’s fine”.
“OK, so I’ll pop you on hold, I’ll be as quick as possible for you then.”
“Brilliant, thank you.”
45 seconds of music………
“Hi, thanks for holding, I’m just going to pass you over to my colleague ‘Person 2’ now who’ll be able to look at this for you, OK?”
“That’s great, thank you.”
“Thank you, take care.”
“Hello, is that Miss XXXX?”
“It is.”
“Hi Miss XXX, my name’s ‘Person 2’, my colleague ‘Person 1’ has advised me that you wish to cancel your Royal London Funeral Benefit Plan, is that correct?
“Yes”.
“OK. Um. He transferred you over to me because I’m the only person available in the erm, the customer service centre. It’s not actually cancellations, so we would need to arrange a call back for you, erm, to actually process the cancellation, would that be ok?”
“No, not particularly, I really want to get this done today please.”
“It will be done today. That call back will be today. We usually have to allow for a two hour turn around so it would be quarter to three.”
“No, I really do need to get this done as soon as possible because I want to get something else sorted out. I’ve already got an appointment with a different pre-payment company this afternoon.”
“Right, ok, bear with me, let me just place you on hold”
“Thank you.”
2 minutes 26 seconds of music
“Hi, Miss XXXX”
“Hello”
“I’m just going to transfer you over to my colleague ‘Person 3’ who is on cancellations.”
“That’s great, thank you”
“She should be able to do that for you ok?”
“That’s brilliant, thank you.”
“Hello, is that Miss XXX?”
“It is, yes.”
“Hello Miss XXX, you’ve been transferred over to ‘Person 3’ in the cancellation team. I believe that you’re wanting to cancel your funeral plan, is that correct?”
“Yes that’s right.”
“OK, can I ask, is there any main reason that you’ve decided to cancel at all, is there anything that we can offer to do for you?
“Well, I spoke to somebody last week, um, to try and find out how much interest the plan’s actually accrued, and just to make sure that my funeral was covered – he was just awful, insisted on speaking over me the whole time, couldn’t actually get a clear answer out of him, and then over the weekend the Competition and Markets Authority report’s come out and that’s just sealed the deal for me so I want to cancel.”
“Right, okay, I mean, I’m happy to answer your questions if you’d like me to go through that with you at all?”
“No, it really is fine, I’ve come to the point where I just want to cancel everything please.”
“That’s absolutely fine, you’re well within your rights to cancel. In order for me to do that over the phone I just need to complete a few additional checks with you.”
“Yep”
“It’s just a couple of questions relating to the original set up of the plan if I may.”
“Mm Hmm.”
“So, could I kindly ask you, when you took out the plan, how it was taken out, so was it done over the phone, was it done via a website do you recall?”
“It was with, well, it was by phone but it was through Royal London.”
“It was.”
“Yeah.”
“And there was some different options of plan type I believe at the time, so there was the Standard Plan, the Classic Plan and the Prestige Plan – do you call what plan type you opted for?”
“Yeah, the Classic Plan.”
“Thank you. And do you recall lastly how you was making payments?”
“Yeah I paid by instalments.”
“Yep, was that direct debit or was that by card? Do you know?”
“Direct debit.”
‘OK, thank you. So that’s all the additional checks that I need to be able to start the process to cancellation, so just to confirm with you what will happen now is I will proceed with the cancellation of the plan, it will be completed within 14 days, any money that you paid into the plan will be refunded, it is subject to a cancellation fee however of £395, everything else you will get back.”
“Right. So, that will leave me with exactly how much?”
“Yup, I can tell that, bear with me.”
“OK, so the refund will be for £2909.53.”
“Right, so in eleven years then, I’ve made £187, you’re going to keep my £187, charge me another £400 to cancel it. Is that basically the gist?”
“Right, so the policies are not – they don’t incur interest, um so..”
“I’m sorry, no, sorry, hang on a minute. So, I’ve taken out a pre-payment plan. And I don’t get interest.”
“No. It’s a product that you’re actually buying. You’re actually securing the services within the plan, that is what you’re guaranteeing, so you took out this plan in 2007, and what you’re doing is, regardless of when that plan comes to be used, you’re guaranteeing the services within the plan so it’s holding the services, the value of the services, so it’s obviously guaranteeing to cover the funeral director’s fees and their staff, it covers the hearse plus one limousine, so everything that’s in your schedule of cover that is what you’re guaranteeing to be covered at the time of need.”
“Oh that’s awesome then, so that means that if I decided to keep this plan then there is not another penny that my family would need to pay if I died tomorrow.”
“There absolutely – once it’s fully paid for you’re guaranteeing to cover your services within the plan.”
“Right, so there’s – hang on, look, I just want to get this straight in my head, ‘cause that’s not what somebody else told me, so you’re telling me that if I keep this plan, if I die tomorrow there is not one penny that my family would have to pay for me to get everything that’s on that plan.”
“No, so everything that’s on that plan you will – you’re –it’s guaranteed to be covered”
“So Oxford Crematorium is £1070, you’re guaranteeing to pay that are you?”
“Let’s have a look. So yours is a contribution plan towards the crematorium fees, so let’s have a look and see what that is worth, because obviously that’s within the plan, those are called disbursement charges.”
“Yep”.
“So there was £600 when you took this out when you took this out – erm, when you took this out..”
“Was it £600? It was actually £640, but – ok.”
“So that is risen in value because obviously that increases with inflation so that is now worth £827.92. So if you, like you said, were to sadly pass away tomorrow, that money your children would have to put towards the crematoria part.”
“So it’s not completely guaranteed then is it?”
“It’s guaranteed to cover everything that’s listed within the plan, so what – the guarantees, in full are to cover the funeral director fees and their staff, that includes the coffin, the hearse and one limousine, for you to be brought into care of the funeral directors so those are your guarantees within the plan so regardless of when that comes of use , those will be covered by the plan, now you’ve got a – you’ve a third party towards contributions with the money that – what I’ve just advised you of there so that money rises each year in line with inflation, that money is then put towards the crematoria costs, so the only things that are not – that come outside of the plan are things like – other things like flowers, if your family wanted an obituary notice, order of service isn’t covered, so those sort of things are separate that fall outside of the plan cover, but the things that I’ve mentioned are fully guaranteed, regardless of when it comes to be used whether that’s tomorrow or ten years.”
“So the crematorium and the doctors’ fees are completely covered as of today, so if I died tomorrow, if there’s a shortfall between what you’ve said I’ve got which is what £827.92 and what the crematorium and doctors’ fees are, that’s covered? I don’t have to worry? My family doesn’t have to worry?”
“Yes, so the contribution towards the crematoria fees, so at the moment it is worth eight hundred and whatever – let me just..”
“Yeah, eight hundred and twenty seven ninety two, so that’s covered, but you keep saying that everything’s guaranteed but it’s not, because if Oxford Crematorium is a hundred and – sorry, one thousand and seventy pounds now, my eight hundred and twenty seven pounds isn’t going to cover that is it, so my family – would my family have to cover that or do you?”
“But that rises each year in line with inflation.”
“Yes but if there’s – if I’ve only got eight hundred and twenty seven pounds in there, and Oxford Crematorium is one thousand and seventy pounds – that’s in eleven years I’ve accrued a hundred and eighty seven pounds, so I can’t imagine the costs are going to be even close to sort of being the same are they, as time goes on? So, all I’m asking, all I want is an answer, will my family have to pay the difference between what it actually costs and what I’ve managed to accrue in interest for the disbursements? Will they get a bill? That’s all I need to know.”
“They will, yes.”
“Right, in which case I’d like to cancel the plan please.”
“That’s absolutely fine.”
“Cool.”
“Give me one moment. I’ve gone through the additional checks with you. Now as – we do legally have to refund the same way that payment was taken so I just need to confirm your bank details with you just to make sure that they still match with what we hold, to make sure that we will be refunding the correct account, would you confirm the name of your bank for me?”
“It’s XXXXX”
“Thank you. And could you kindly confirm the sort code and account number for me.”
“Yeah it’s XXXXXXX and the account number is XXXXXXXX”
“Wonderful. So that still matches with what we hold. So the refund will be applied to that bank account within 14 days. On completion of the cancellation Miss XX we’ll also send you confirmation in the post so you will get a letter to confirm everything that I’ve discussed with you and that the plan is fully cancelled down. Is there anything else that I can assist you with at all?”
“No, that’s it, thank you, you’ve been really helpful.”
“Oh you’re most welcome, well thank you very much for your time Miss XXX. I hope you enjoy the rest of your day.”
“Thank you.”
“You’re welcome, bye.”
Here’s a curious thing.
The deadline to submit responses to the Competition and Markets Authority’s consultation on their proposal to make a market investigation reference was 5pm on Friday 4th January.
This is specified on page 132 of their Interim Report, in bold font: ‘Such comments should be provided no later than 5pm on 4th January 2019‘.
Like many others, the GFG absolutely busted our guts to get our response submitted in time. In fact, much of last week was spent ensuring that we provided a thorough and honest response to all of the questions asked. We thought that the deadline was just that – the latest time or date by which something should be completed.
But for some reason, it seems that at least one of the funeral trade associations have been given an extension, and are currently ‘developing their response’, according to their Facebook post today. Three days after the deadline.
We’re underwhelmed at this, to say the least.
Dear Reader
Are you connected to funerals in any way?
Are you somebody who has an interest in what goes on in funeralworld?
Have you had to arrange a funeral, or had to think about funeral arrangements for someone close to you?
Or do you work in the funeral sector?
Have you seen or heard things that you know are just wrong?
Are you concerned about aspects of your work, prices that you can’t justify to clients, procedures that you have to follow that you find uncomfortable, things that have gone on behind the scenes that worry you?
Have you been a bit busy recently and not got round to responding to the consultation launched by the Competition and Markets Authority at the end of November?
YOU’VE ONLY GOT FIVE DAYS LEFT.
(We wrote about the CMA’s Interim Report on the blog here and here if you want to refresh your memory)
Comments are invited on the CMA’s provisional decision to make a market investigation reference (MIR) in relation to the supply of services by funeral directors at the point of need and the supply of crematoria services in the UK.
Such comments should be provided no later than 5pm on 4 January 2019 to:
Funeral market study team
Competition and Markets Authority
Victoria House
Southampton Row
London
WC1B 4AD
E-mail: funerals@cma.gov.uk
This is hugely important.
It could completely change the landscape of the funeral sector for the benefit of people who need to arrange funerals. And that, effectively, will be all of us.
Please, make sure that the CMA hears from people from all walks of life who have an interest in how the funeral sector is currently operating.
If you have relevant experience or thoughts on the proposed investigation into the funeral sector, then make your voice heard.
If you don’t take the time to write and tell the CMA what you think, the responses received will be dominated by replies from corporate funeral operators and trade associations.
Your experience matters.
Your opinion matters.
You are the people the CMA need to hear from.
It’s time to speak up.
The full interim report and details of the consultation can be downloaded here, along with the findings of the research commissioned by the CMA to understand the behaviour, experiences and decision making of people who had recently engaged the services of a funeral director.
The report is a lengthy document but well worth reading – if you haven’t got time to do so, then here is a precis of what the CMA is inviting comments on:
‘The CMA considers that this interim report identifies significant concerns about the effectiveness of competition in relation to the supply of funeral services at the point of need and the supply of crematoria services in the UK.’
‘The CMA welcomes representations from interested parties on the provisional decision set out in this document. The CMA wishes to stress the importance of the consultation process in assisting the CMA’s decision making and urges interested parties to engage with the consultation. Respondents may wish to reply in relation to the supply of services by funeral directors at the point of need, in relation to the supply of crematoria services, or both. In doing so, respondents may wish to consider the following questions:
Do you consider that the CMA’s analysis is correct with respect to the suspected features of concern in the supply of:
- services by funeral directors
‘8.31 Based on the evidence and our analysis set out in section 4, our provisional view is that there are reasonable grounds for suspecting that one or more of the following features or combination of features prevents, restricts or distorts competition in the supply of services by funeral directors at the point of need in local areas:
- Customers’ vulnerability and difficulty in engaging at the point of need.
- Customers’ unresponsiveness to measures of price and quality; they largely choose a funeral director on the basis of recommendation or personal experience.
- Customers’ inability to assess certain aspects of quality and the value for money of all options offered given funerals are an infrequent purchase and customers are often inexperienced.
- Lack of transparency: reluctance of firms to publish / disclose clear prices (including online) or to provide comprehensive information on quality and range.
- Point of sale advantage: ability of suppliers to largely control the decision-making process leading to the sale and its outcome.
- Ineffective self-regulation in respect of information transparency – no mandatory publication of online prices, absence of publication of inspection reports.’
- crematoria services
‘8.33 Based on the evidence and our analysis set out in section 5, our provisional view is that there are reasonable grounds for suspecting that one or more of the following features or combination of features prevents, restricts or distorts competition in the supply of crematoria services in local areas:
- Customers’ vulnerability and difficulty in engaging at the point of need.
- Customers’ unresponsiveness to measures of price and quality; they largely choose a crematorium on the basis of location or personal experience.
- Low numbers of crematoria providers in local areas.
- High barriers to entry arising from the planning regime and high fixed costs, which limit the number of crematoria in each local area.’
Do you consider that the CMA’s analysis is correct with respect to the reference test being met in relation to the supply of:
- services by funeral directors at the point of need (see paragraphs 8.12 to 8.37) and
- crematoria services (see paragraphs 8.12 to 8.37)?
Do you agree with the CMA’s proposal to exercise its discretion to make a reference in relation to the supply of services by funeral directors at the point of need and the supply of crematoria services (see paragraphs 8.38 to 8.96)?
Do you consider that the proposed scope of the reference as set out in the draft terms of the reference in Appendix F, would be sufficient to enable any adverse effect on competition (or any resulting or likely detrimental effects on consumers) caused by the features referred to in paragraphs 8.31 and 8.33 to be effectively and comprehensively remedied?
Do you consider that the features which the CMA has identified that may prevent, restrict or distort competition are capable effectively and comprehensively remedied by UILs (undertakings in lieu of a MIR)?
Do you have any view on our current thinking on the types of remedies that an MIR should consider (see paragraphs 8.66 to 8.86)? Are there other measures we should consider?
Funeral director services:
- Transparency remedies
- Changes to the regulatory framework
- Establishment of a regulatory body
- CMA-led price regulation
Crematoria
- Establishment of sectoral regulator or price regulation
- Guidance to local authorities
- Changes to the planning system
Other possible remedies
The CMA would particularly welcome any specific evidence from respondents in support of their views.
In addition to the above, the CMA would also welcome evidence and views on the following matters:
- Quality of care of the deceased: we have received anecdotal evidence that there may be varying standards of care being applied by funeral directors and would like to understand how widespread such issues may be. We would therefore like to hear from people who have witnesses standards of care which they considered to be unacceptably low.
- Issues specific to religious groups that are not covered in this report: we have focused our work on the transactional aspects of funerals involving funeral directors and crematoria. We believe that the issues we have identified in relation to those specific aspects would essentially be similar across all faiths (to the extent that the way they organise funerals involves transactions with funeral directors or crematoria. We are keen to find out whether we may have overlooked any issue of relevance and will seek to engage actively with the representatives of the major faiths.
Our intention is to publish on the CMA’s website an aggregated and anonymised summary of submissions from individuals, although if you prefer, you can indicate that you would prefer for your response to be published in full.
We intend to publish all responses from business and other organisations on the CMA’s website, except those responses marked as confidential. Respondents may request that their response be kept confidential. If you would like your response to remain confidential, clearly mark it to that effect and include the reasons for confidentiality. Please restrict any confidential material to the appendices to your response.
We will redact, summarise or aggregate information in published reports where this is appropriate to ensure transparency whilst protecting legitimate consumer or business interests.’
We have a chance to make a change. Right now.
Do you want to improve things for bereaved people? Do you want to be a responsible citizen who stands up for what they know is right?
Then find ten minutes to tell the CMA what you think.
Thank you.
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.
AT LAST!!!!
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!
The Competitions and Markets Authority are proposing a major funerals probe after identifying serious concerns in the funeral sector.
It’s a long read – 133 pages – find the full interim report on the Funerals Market Study page here (scroll down for ‘Interim report and consultation’.
We publish this morning’s press release in full below:
‘Today’s interim report presents the issues the Competition and Markets Authority (CMA) has identified since launching a Market Study into the funerals sector 6 months ago.
Its initial work indicates problems with the market that have led to above inflation price rises for well over a decade – both for funeral director services and crematoria services. The scale of these price rises does not currently appear to be justified by cost increases or quality improvements.
Given the nature and significance of the issues the CMA has identified, it believes the full powers of a Market Investigation – carried out by an independent group of CMA panel members – are required. Issues include that:
- Today, people generally spend between £3,000 and £5,000 organising a funeral, and the price of the essential elements has increased by more than two-thirds in the last 10 years, almost 3 times the rate of inflation. Organising a funeral would now cost those on the lowest incomes nearly 40% of their annual outgoings, more than they spend on food, clothing and energy combined.
- Customers could save over £1,000 by looking at a range of choices in their local area. However, people organising a funeral are usually distressed and often not in a position to do this – making it easier for some funeral directors to charge higher prices. Prices are also often not available online, making it difficult to compare options.
- While some smaller funeral directors have sought to keep their prices low, other providers – the larger chains in particular – have implemented policies of consistently high year-on-year price increases. A number of these have now introduced lower cost funeral options, but this doesn’t go far enough to make up for years of above inflation price hikes. The CMA’s evidence also indicates most people who organise a funeral remain extremely vulnerable to exploitation and future rises in charges.
- Cremations account for 77% of funerals, yet there are limited choices for most people in their local area and fees charged by crematoria have increased by 84% on average in the past 10 years, more than 3 times the rate of inflation.
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 CMA will now be consulting on the potential market investigation reference and welcomes any views on the issues identified in its report by 4 January 2019.
It would also like to hear from people involved in the industry and others, who may have observed instances of poor quality standards in the back-of-house facilities of funeral directors. Details on how to respond are available on the funerals market study page of the CMA website’
Last week, the Competition and Markets Authority published the findings of the consumer research undertaken as part of their Funeral Markets Study.
It makes interesting reading.
The research was commissioned from Research Works and Ipsos MORI as part of the attempt to understand the behaviour, experiences and decision-making of people who had recently engaged the services of a funeral director.
We read through all the findings and felt that there were some important points that should be highlighted. We quote directly from the research:
‘Levels of knowledge of the funerals marketplace were generally very low in this sample. Consumer knowledge about how to arrange a funeral was broad and relatively vague, but finding out more did not appeal, other than finding a funeral director to take on the task of making the arrangements when required.’
‘When they first started thinking about the funeral arrangements, most respondents thought that funerals were expensive.’
‘Broadly, the expense of funerals was accepted and not scrutinised at the point of need, as long as it fit with respondents’ ‘ballpark’ estimates. However, reflecting back on the funerals they organised, a small group of respondents questioned why funerals were so expensive and to what extent this cost was justified.’
‘Most respondents did not compare two or more funeral directors to help them decide which funeral director to use.’
‘… a large group of respondents felt under time pressure to organise the funeral as quickly as possible, minimising the time or will they had for comparing funeral directors. A large group also reported emotional distress as one of the factors for not shopping around, as they felt that would have added more burden at an already difficult time. The research also found that cultural sensitivities around funerals may make some uncomfortable to shop around based on price, as this may be perceived in negative terms (e.g. as putting a ‘price tag’ on the deceased or not caring enough for them).’
There’s lots more to read if you want a more detailed understanding of the findings of the research, but on the whole, it appears that:
Most people don’t want to think about arranging a funeral until they must.
Most people expect funerals to be expensive (well done life insurance companies and funeral plan providers, the media regurgitation of the astronomical figures attributed to the cost of dying and all those relentless adverts on day time TV seem to be working well…).
Most people don’t challenge the funeral cost that they are presented with.
Most people don’t compare two or more funeral directors before engaging one.
Most people are unaware that there can be considerable variations in the prices charged by different funeral directors.
Most people are unaware of ways in which funeral costs can be managed or reduced.
Many people feel pressurised to organise a funeral quickly.
All respondents wanted a local funeral director.
Most people would not change the funeral director once they had chosen them, even if problems arose in the service they received.
Pretty much what we at the GFG have been saying for years.
There’s little appetite among the public to think about funerals in detail, funerals are expected to be costly and the idea of shopping around between funeral directors is viewed as something rather not nice.
Bereaved people on the whole are uninformed, unwilling or unable to become informed for a multitude of reasons – and, even for those who want to be, unable to easily find the information that would enable them to be better informed.
We expect that when the CMA publishes its final report later this year, these findings will form part of the conclusions, and will add weight to the growing momentum towards some form of regulation of the funeral industry.
The conclusions of the CMA research are re-printed below:
“The research suggests that the funerals market does not seem to work as well as it might when:
Consumers lack experience of arranging funerals. Those with experience of arranging funerals are much more likely to scrutinise how many services they ask the funeral director to provide, and the cost of individual elements, as well as overall cost levels.
The funeral is being paid for from the deceased’s estate and they have specified their wishes. The person arranging the funeral may not perceive themselves as ‘owning’ the purchase, so their main concern is with ensuring the deceased’s wishes are followed and they are not as motivated to scrutinise the cost.
Consumers feel under pressure to move the deceased person’s body from the place where they have died (e.g. their home, care home) and subsequently make a decision about a funeral director very quickly, typically based on very little information about funeral directors available in an area.
Consumers attempt to find cost information online. There is a perceived lack of cost information available on funeral director websites and consumers appear unlikely to use other sources of information (such as price comparison websites).
Consumers are located in a rural environment, where the choice of local funeral director is assumed and prices are not discussed until after the event.”
Both funeral industry trade associations also published their responses to the research last week – the National Association of Funeral Directors welcomed the results of the research in a press release here. (It’s an impressive exercise in skimming over issues raised by the research, focusing approvingly instead on the points that people ‘overwhelmingly want to follow the wishes of the person who died’, and that funeral directors were chosen on ‘locality and previous experience’.)
A more considered and comprehensive response from the National Society of Allied and Independent Funeral Directors acknowledged some of the concerns raised by the findings and highlighted two issues in particular: the CMA’s claim that trade associations do not offer consumer protection and concerns over transparency of ownership.
Our recent blog post about Simplicity Cremations, the offshoot of Dignity Funerals, elicited this response from a disapproving reader:
‘This rattled me. “Dignity’s prices are too high and they are the cause of funeral poverty. Big bad dignity”. “Dignity lower their prices and offer a low cost cremation option. Big bad Dignity”.
Seems to me that someone has a bee in their bonnet and constantly looks for the negative.
Simplicity Cremations offers almost zero funeral director contact. The deceased is washed and dressed but that’s about it. A funeral director will arrange the Crem forms and dr’s fees but it stops there. There’s no face to face contact. Families arrange their own officiant, flowers, music and so on. The £600 odd pounds you’re quoting seems to only really cover the admin side of things, collecting and dressing the deceased, transport and a coffin. Seems fair enough.’
Hmm.
Let’s have a look at how the other arm of Dignity PLC (the owners of Simplicity Cremations) prices the services they offer clients.
Somehow, we don’t think that a figure of £600 odd pounds for the ‘admin side of things, collecting and dressing the deceased, transport and a coffin’ is considered ‘fair enough’ by the Dignity management when it comes to charging those families who prefer ‘face to face contact’. Or the bereaved people who do what most people in this country do, go into their local funeral director rather than going online to make arrangements.
Dignity Funerals Ltd is the company which, at the last count, has 831 high street branches (all trading under their original names) It is the company that conducted 39,700 funerals in the first six months of this year. Or an estimated 12.1% of all the funerals carried out in Britain.
And apparently, Dignity’s methods of pricing their high-street-facilitated funerals are remarkably different from those used for their on-line business.
You will be faced with a bill of significantly more than ‘£600 odd pounds’ for ‘the admin side of things, collecting and dressing the deceased, transport and a coffin’ if you walk into one of their high-street branches.
That ‘face to face contact’ seems to bump up the prices by several thousand pounds.
We collected some current price lists from Dignity branches in the London area and the South East and North of England.
Here’s what we found.
The prices shown are for Dignity’s ‘Full Service Funeral’ – i.e. a funeral on a day and time that you choose (rather than them telling you when you can have it), with a choice of coffin and the option of having the person dressed in their own clothes (rather than a ‘suitable basic gown’), the option to spend time with them at the funeral home, assistance in organising floral tributes, obituaries, service stationery and donations, and the freedom to add limousines if you want.
Or, in other words, what most people would expect a funeral director to offer.
|
|
London | South East England | North England |
| ‘Our Service to You’* | £1,705* | £1,655* | £1,470* |
| ‘Our Service to the Person who has Died’* | £1,045* | £1,020* | £1,015* |
| ‘Your Appointed Funeral Director’* | £ 720* | £ 700* | £ 725* |
| ‘Our Hearses’* | £ 720* | £ 720* | £ 620* |
| ‘Our Limousines’ | £ 252 (from) | £ 252 (from) | £ 175 |
| ‘Traditional’ coffin range | £ 150* – £1,250 | £ 150* – £1250 | £ 150* – £1,250 |
| Cardboard coffin | £ 660 | £ 660 | £ 660 |
| Willow coffin | £1,015 | £1,015 | £1,105 |
If your eyes are glazing over at all the figures, we’ve added them up for you below. And we offer some prices from GFG Recommended Funeral Directors for comparison. (We hadn’t intended to do so, as this post is meant to be about the Dignity prices charged by different arms of the business for very similar services, but we thought comparisons with the prices of some independently owned businesses might be informative.)
We included the components with stars against them in the results table above, i.e. the charge for meeting and making the funeral arrangements, the charge for collecting and caring for the person who died, the peculiar additional charge for ‘Your Appointed Funeral Director’ (we’ve never come across a separate fee for having a funeral director appointed to you before?), and the charge for a hearse. We used the lowest priced coffin in the Dignity range, just to keep it simple, although we think that probably very few families pick the £150 option when presented with the coffin brochure, and we didn’t include embalming, even though the Dignity blurb states ‘…. as members of the National Association of Funeral Directors we recommend the peace of mind that embalming brings.’
We then checked the prices for the same or comparable service listed by independent funeral directors in the same parts of the country on our Recommended list.
Oh, and remember, these are figures for just the funeral director fees.
Cremation or burial costs, medical certificates if required (in England and Wales), and the fee for a minister or officiant will be in addition to the figures shown. Also, flowers, orders of service, limousines, placing of obituaries or other optional extras will all be extra costs. It would probably be wise to budget at least a further £1,000.
Here we go:
If you are in the London area, the Dignity price we were given is £4,340
For comparable services, Leverton & Sons would charge £2,310
From Compassionate Funerals, comparable services would cost £2,159
If you are in South East England, the Dignity price we were given is £4,095
Comparable funeral director services from Albany Funerals would cost £2,245
From Holly’s Funerals, comparable services would cost £2,131
If you are in the North of England,the Dignity price we were given is £3,980
Comparable funeral director services from Barringtons Independent Funeral Services would cost £2,150 (and include a limousine)
From Saint and Forster Funeral Directors, comparable services would cost £1,690)
Now, we know that there’s the fabled ‘face to face contact’ involved with all of the prices above. And a hearse. And visits to the chapel of rest if you want them. And a funeral director too. And staff to carry a coffin.
But what we are trying to illustrate is the VAST chasm between the prices charged for the‘admin side of things, collecting and dressing the deceased, transport and a coffin’ by the same company.
Just as a reminder, Dignity’s Simplicity Cremations ‘Attended Funeral’ costs £1,895 including cremation and doctors’ fees.
The lowest Dignity Funerals Full Service Funeral price we found cost £3,980 WITHOUT cremation and doctors’ fees.
That ‘face to face contact’, flexibility in arrangements, visits to the person who died and providing a hearse and staff at the funeral appears to add something in the region of three thousand pounds to the price.
(Now, in case anyone’s interested, the most recent Dignity Investor Presentation reports £120,100,000 revenue from their funeral services in the first 26 weeks of 2018, with Underlying Operating Profit of £42,100,000
Forty two million pounds. In six months.
The Investor Presentation is downloadable here.)
We’re sure that Dignity will be at pains to tell us that they offer a Simple Funeral for £1,995 plus third party costs.
We know this.
We also know that if you opt for a Dignity Simple Funeral:
You will not be able to decide the date and time of the funeral, they will choose it.
You will not be able to choose a different coffin.
The person who died will not be dressed in their own clothes.
You will not be able to add a limousine if you want one.
There will not be a funeral procession.
Payment of third party costs will be required at the time of making the arrangements, with the balance due 48 hours before the funeral.
See ‘Some important points about the Simple Funeral‘ here.
This restricted service is possibly not what most people would expect in return for paying a funeral director almost £2,000 for their service. Even with the face to face contact (and ‘motorised hearse’) you get with Dignity’s Simple Funeral.
You could ditch the face to face contact and the hearse, pick the day and time of your choice, have a similar coffin and save yourself around a thousand pounds (which you’d need to find for the third party costs on top of the Simple Funeral fee) by opting for a Simplicity Cremations Attended Funeral with that all-in price of £1,895.
Though this probably won’t be offered to you if you are a bereaved person who goes into a high street branch of Dignity. It’s only available online. From a company with a different name.
(Or, you could choose to use an independent funeral director instead. Ideally, one that we recommend. Look again at the prices for full, unrestricted funeral services from independent companies above.)
But to go back to the original point of this post, and to directly address the person who objects to our opinion and thinks we constantly look for the negative:
No, on balance, and with the greatest of respect, dear disgruntled reader, we don’t think it’s ‘fair enough’.
We don’t think it’s fair at all for a funeral provider to be subsidising costs for some bereaved people and charging much, much higher prices, for remarkably similar services, to other bereaved people.
Which is what appears to be happening here.
Incidentally, if you’ve read this far, you might want to have a browse through comments from some long-suffering Dignity PLC shareholders here and here, – many have seen the value of their shares crash since last year and are nervously watching the so-called ‘price war’ between Dignity and Co-operative Funeralcare, wondering how this will impact on the value of their holdings.
Some of the more optimistic appear to be hopeful that, under the lead of Paul Turner, Dignity’s new ‘Transformation Director’, the company’s performance will pick up, and the value of their holdings will start heading up from today’s level (around £10.50 a share) back towards the giddy heights of £24.60 a share just last November.
The Dignity transition programme is expected to be largely completed over a three year time frame according to that Investor Presentation. So possibly a scenario for ‘Hold’. (Or ‘Hope’.) Time will tell.
Meanwhile, according to some former and current Dignity employees, there’s a rather gloomier picture on the inside, read reviews here.
Now, where’s that bonnet?
